Mehmet KARA / ENERGY AGENDA
Russia’s cutting off gas flow to European countries in the past weeks was a critical development in terms of regional and global energy balances. This step had ended Russia’s reputation as a “reliable natural gas supplier”, which had lasted for nearly half a century. In fact, it can be thought that Moscow sees the inevitability of losing this title, which it has cherished for years, so it can be thought that it has put the gas cut into action by showing Europe. You might ask where this came from, but in recent years, a lot of water has flowed under the bridge in natural gas logistics, many things have changed, and it was inevitable that the balances would re-establish.
How Does? Let’s try to explain…
Until 15 years ago, a common method of using natural gas for natural gas in European countries, other than transportation via pipelines, did not come to mind. This included using natural gas in liquefied form, that is, as LNG. After all, liquefying the product and then turning it back into gas required significant energy expenditure, which made it inevitable that LNG would have a much higher cost than pipe gas.
However, countries such as Japan and South Korea have been using LNG delivered to them by sea for a long time. Europe has also come a long way in the last 10 years, especially in the last five years, when it chooses to transport and distribute natural gas in liquefied form. In this, the USA’s serious investments in shale gas (shale gas) investments had a great impact. In the past, the USA, which was a natural gas importer, was able to go beyond meeting its own needs and export natural gas thanks to its shale gas investments. However, it was not enough to extract the gas for export. Sales channels were also needed. The way to do this was to be able to sell to the old continent, that is, to European countries, which is the biggest natural gas consumption market.
US shale gas passenger to Europe
Of course, there were serious obstacles to establishing such an infrastructure that would make the USA gas supplier to Europe. First of all, the USA needed exit terminals to convert natural gas to LNG and load it on tankers. They got to work right away. On the Atlantic and Pacific coasts, terminals that were previously established for LNG purchase have begun to be transformed into LNG loading and sending terminals, and even new LNG loading facilities have been built next to them.
LNG receiving terminals to Europe
Meanwhile, LNG reception terminals were being established on the Atlantic coasts of Europe. Of course, these required large investments. It seemed that it was necessary to go a long way to get to the desired point. While the USA and European countries, and even Turkey, focused on working on them, Russia was not idle either. On the one hand, Moscow was establishing new transmission lines that would transport its own natural gas to the gates of Europe, on the other hand, it was taking steps and making progress in the newly developing LNG market.
TurkStream, Nord Stream 2 and the power of Siberia
Among the new natural gas lines were the TurkStream line, which would pass under the Black Sea to transport gas to Turkey and from there to Europe, and the Nord Stream 2 line, which would pass under the Baltic Sea and transfer gas to European countries, primarily Germany. Russia, which was preparing to sell its product in the West, also did not neglect the East. The name of the pipeline that will carry gas from Russia to China was determined as Power of Siberia.
annexation of Crimea, occupation of Ukraine
While investments to establish gas pipelines, LNG receiving and loading terminals and LNG tanker fleets all over the world continue simultaneously, energy There were many economic, political and military crises that could affect the issue. Civil war in Syria, annexation of Crimea, war in the Upper Karabakh region of Azerbaijan under Armenian occupation were some of them. It is also useful to remember events such as the downing of a Russian plane in Turkish airspace during the conflict in Syria.
The end of the “trusted supplier” myth
It has always been discussed whether Russia will use natural gas as a weapon during all wars, conflicts and crises in near and far geographies. The title of “Reliable gas supplier Russia”, supported by the argument that “it did not cut gas even in war or hot conflict”, came from these processes. This title, which was protected in the first six months of the occupation of Ukraine, which started on February 24, 2022, despite the policy of “No gas for those who do not pay in rubles”, has officially ended in the past weeks. Russia, which cut off the gas flow from Nord Stream 1 due to malfunctions before and several times, finally announced that it cut off the gas flow to Europe.
Concern about freezing this winter in Europe
Russia’s cut off the gas brought to the top the concerns that Europe will freeze this winter, which started in mid-summer. Efforts to take precautions against this possibility have intensified. The most well-known of these are using energy saving, extinguishing shop window lighting, increasing alternative energy supply opportunities to natural gas, re-commissioning some energy facilities that were previously deactivated or announced to be closed, such as coal and nuclear power plants.
Storage facilities filled
In the meantime, the utmost care had been taken to fill the old and newly built natural gas storage facilities to the brim, and it could be said that the gas storage facilities in European countries were almost completely full (the average occupancy rate was above 85%) just before Russia cut off the gas.
Energy wars and hot war
In the 1990s, the competition of different energy suppliers, hence the pipeline routes, with each other, the European Union’s efforts to reduce the dependency on Russia in the 2000s. legislation Natural gas wars, which have always been on the agenda with the efforts of development (ensuring competition, etc.), have evolved to a completely different point today after the invasion of Ukraine. The embargo efforts of Europe on Russian gas and oil, which the USA wanted so much and even made great efforts to do so, began to yield results.
While the necessity for Russian gas continues…
Although European countries reluctantly continued to use Russian gas, with the effect of the embargo, Russian oil began to find buyers at 30 percent below its counterparts in international markets. Because the scope of the embargo was extended and the countries that would buy Russian oil were faced with the American threat. It was after these developments that Russia cut off the gas of European countries, which had been making various preparations for a long time in order not to buy their own gas and energy.
Holes in Nord Stream 1
After the reliable gas supplier of the last 40 years, Russia, cut off the gas flow to European countries and gave up this title, it is a matter of curiosity how things will evolve. While European countries continue their preparations for a winter where Russian gas will not flow, the messages “Accept the opening of the North Stream 2 Line, let’s open the gas valves” from the Russian leader Vladimir Putin apparently did not receive much response. However, there was another interesting development, which was the news that there were simultaneous gas leaks at three different points of the Nord Stream 1 gas pipeline, which has been feeding Europe for years.
Everyone calls it sabotage, but…
It is not easy to convince people that this gas leak, which emerged in the middle of all the tensions, was a coincidence. The majority certainly believe in sabotage. So who could have come from such an attack on the pipeline? Many scenarios are possible, of course. Knowing that if Russian gas does not flow, there will be an energy shortage this winter and trying to take measures against it, will Europe render a gas pipeline dysfunctional in case of a possible agreement? Low probability.
US finger or Russian stubbornness?
Could it be that another actor, namely the USA, has a hand in this, who wants Europe to cut its ties with the Russian pipe gas, completely break the bridges with Moscow and act together with it? Or, can it not be thought that Russia, which wants to corner Europe in order to open the Nord Stream 2 Line, which it is about to finish the construction and fully commission, is embarking on a risky game? We do not have enough information to answer these questions. However, after Russia cut off gas flow to Europe, it is possible to say that nothing will be the same in natural gas logistics.
So how will the future come?
If natural gas will continue to maintain its place in global energy consumption, logistics It is not necessary to be a prophet to say that LNG and CNG will come to the fore more. Life knows no gaps, it spoils the hard game. It is certain that pipelines will not be enough for the transportation and distribution of natural gas, which is increasingly used by energy suppliers and consumers. In fact, it can be said that the world will move towards a widespread LNG infrastructure that will ensure energy supply security. Just as there are unlimited options in the supply of petroleum-derived products, especially gasoline and diesel, it may be possible to move towards a similar point in natural gas. Of course, considering that the kilowatt-hour (kWh) unit instead of cubic meters or tons in energy has become a more common expression, it is possible to say that the industry may evolve to other unpredictable places.