Europe's gas storage will run out in six weeks if a Russian invasion of Ukraine disrupts supplies, a leading energy consultancy has warned.
The report from UK group Wood MacKenzie said it will be impossible for European countries to find alternative volumes to meet demand.
The warning comes hard on the heels of US President Joe Biden’s threat to shut down Russia's Nord Stream 2 pipeline if Russian President Vladimir Putin attacks Ukraine.
Nord Stream 2, which is not yet operational, stretches for almost 800 miles from Russia across the Baltic into Germany.
Any threat to it could force Putin to react, potentially cutting off Russian supplies to Europe through its existing pipeline.
Wood MacKenzie said: “Were all gas flows (from Russia) to stop today, existing gas storage would run out in six weeks. Demand destruction would be massive and if the disruption was prolonged, gas inventory couldn’t be rebuilt through the summer.”
It added: “We’d be facing a catastrophic situation of close to zero gas in storage for next winter. This scenario highlights how dependent Europe has become on Russian gas and the critical role diplomacy and commercial sensibilities have to play to ensure supplies keep flowing.”
Europe gets almost 40 percent of its natural gas from Russia and the report said it would be impossible to find alternative supplies to meet its current demand.
Against the backdrop of a fall in Russian gas exports to Europe, Liquefied Natural Gas imports have doubled in recent years and accounted for about 20 percent of Europe’s gas supply in 2021.
However, the consultancy said: “LNG volumes into Europe surged through the fourth quarter (of 2021) to hit record levels in January. Warmer temperatures in Asia prompted LNG traders to reroute cargoes to take advantage of higher prices in Europe, temporarily reducing European buyers’ requirements of Russian imports. That though has now reversed with the arrival of cold weather lifting Asian spot LNG prices.”
The controversial Nord Stream 2 outlet bypasses Ukraine and Poland and has been at the center of Putin's standoff with Kiev. Critics say that the natural-gas pipeline will strengthen Russia's hand in Europe and isolate Ukraine.
The pipeline, which would sharply reduce the cost to Russia of exporting its gas, is still awaiting final approval from the European Union but Ukraine is concerned once Nord Stream 2 is operational it will lose around $2 billion (SR7.5 billion) a year in so-called transit fees.
European gas imports from the existing Nord Stream pipeline, which runs through Ukraine, have halved since 2019 amid accusations that Putin was withholding supplies to Europe to drive up prices and pressure regulators to approve Nord Stream 2.
Wood MacKenzie said: “Russia also has a lot to lose – not least its reputation as a reliable supplier of gas; and Nord Stream 2 which is in danger of becoming a white elephant. Should Europe choose to wean itself off Russian gas it’s a bullish signal to LNG developers in the US, Qatar and beyond.”
Germany relies on Russia for around 50 percent of its natural gas supplies and would be the biggest beneficiary of Nord Stream 2 should it and the EU give it final approval.
Berlin has been accused of failing to support fellow NATO members in Eastern Europe as Russia has built up around 100,000 troops on the Ukraine border in recent weeks.
While NATO members have sent weapons and advisers to Kiev, Germany sent 5,000 helmets for Ukrainian troops.
Russia’s central bank is estimated to be sitting on $600 billion in reserves giving it an ample short term buffer in the event it is hit with sanctions on its banks or the country’s energy exports.