European winters are gloomy. The higher the humidity, the lower the perceived temperature. This week, temperatures in most areas have dropped below freezing. Yesterday, the daytime high in Helsinki, Finland was minus 11 degrees Celsius. A cold wave from the North Pole is also predicted soon. It is a time when the demand for gas for heating and power generation is rapidly increasing.
In the meantime, Russia closed the valve of the ‘Yamal-Europe gas pipeline’ to Germany via Belarus and Poland. From the 18th, the transport volume was lowered to the usual 4% level, and on the 21st, the supply was stopped altogether. The pipeline, operated by Russian state-owned Gazprom, accounts for 20% of Russian gas to Europe. The European Union (EU) relies on Russia for more than 40% of its natural gas imports.
European natural gas prices jumped to all-time highs as Russia stopped supplying gas. It doubled from the beginning of this month and more than 10 times from the beginning of the year. If this goes on, electricity produced from natural gas will be reduced, which could lead to large-scale blackouts across Europe. In 2006 and 2009, Russia blocked gas pipelines to Ukraine, causing great damage to France and Italy.
Western media cited Putin’s political gamble with the ‘weaponization of energy’ as the main reason for this incident. The immediate pressure is to quickly start up the new Russian-German gas pipeline ‘Nord Stream 2’, which will be operated by Gazprom. For this gas pipeline, which was completed in September, Germany said it would be difficult to approve it until the first half of next year, citing the EU energy regulation that stipulates ‘separation of suppliers and transport companies’.
A bigger reason is the struggle for hegemony over Ukraine. As concerns in Europe and the international community have grown over Russia’s deployment of large-scale troops on the border with Ukraine, critics have been calling it a calculated provocation by Putin to contain it. There are even analyzes that Putin is trying to capture both the political purpose of blocking NATO’s eastward movement and the economic achievement of approval of a new gas pipeline.
The sparks of the European gas crisis from Russia are also spreading in Korea. As Europe increased imports of liquefied natural gas (LNG) from the US instead of from Russia, domestic LNG prices more than tripled from June to July due to a supply shortage. If gas supply is reduced, there may be a situation where coal power generation must be resumed. Since then, the industry’s anxiety that “everywhere is a minefield” is growing.
Koh Doo-hyeon, Editorial member kdh@hankyung.com
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