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Bruegel — Can Europe survive painlessly without Russian gas?

Summary:
Longish analysis that goes into the details. Here is the summary.SummaryUntil the summer, the EU would likely be able to survive large-scale disruption to Russian gas supplies, based on a combination of increased LNG imports (to the limited extent this is technically possible) and demand-side measures such as industrial gas curtailments. However, this would come at a cost for the EU economy and might even result in some countries (those more exposed to Russian gas and less interconnected with other EU countries) having to take emergency measures.But, should a halt of Russian gas be prolonged into the next winters, it would be more difficult for the EU to cope. On the supply side some spare import capacity is available but reaching the scale required to entirely replace Russian volumes

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Longish analysis that goes into the details. Here is the summary.
Summary

Until the summer, the EU would likely be able to survive large-scale disruption to Russian gas supplies, based on a combination of increased LNG imports (to the limited extent this is technically possible) and demand-side measures such as industrial gas curtailments. However, this would come at a cost for the EU economy and might even result in some countries (those more exposed to Russian gas and less interconnected with other EU countries) having to take emergency measures.

But, should a halt of Russian gas be prolonged into the next winters, it would be more difficult for the EU to cope. On the supply side some spare import capacity is available but reaching the scale required to entirely replace Russian volumes would be at best very expensive, and at worst physically impossible. Limiting factors include global liquefaction capacity constraints, existing obligations in the current LNG market and commercial opportunity considerations in producing countries in relation to diverting shipments away from Asia. There would also be pricing implications and second-round effects on the poorest countries. The EU would thus need to resort to demand-side measures, which would prove painful for different countries/constituencies. This will raise questions on how to fairly share the burden. Difficult and costly decisions would have to be taken to manage the situation in an orderly way....

Bruegel
Can Europe survive painlessly without Russian gas?
Ben McWilliams, Giovanni Sgaravatti, Simone Tagliapietra and Georg Zachmann
https://www.bruegel.org/2022/01/can-europe-survive-painlessly-without-russian-gas/
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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