Russian Invasion of Ukraine: Global Implications

Russia resumes gas supplies to Europe via Nord Stream Pipeline

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nord Stream Pipelines

Mains level : Energy implications of Russia-Ukraine War

Russia restored critical gas supplies to Europe through Germany via the Nord Stream pipeline after 10 days of uncertainty in guise of maintenance.

Nord Stream Pipeline

  • It is a system of offshore natural gas pipelines running under the Baltic Sea from Russia to Germany.
  • It includes two active pipelines running from Vyborg to Lubmin near Greifswald forming the original Nord Stream, and two further pipelines under construction running from Ust-Luga to Lubmin termed Nord Stream 2.
  • In Lubmin the lines connect to the OPAL line to Olbernhau on the Czech border and to the NEL line to Rehden near Bremen.
  • The first line Nord Stream-1 was laid and inaugurated in 2011 and the second line in 2012.
  • At 1,222 km in length, Nord Stream is the longest sub-sea pipeline in the world, surpassing the Langeled pipeline.

Why in news?

  • Germany, which is heavily dependent on Russian gas, had feared that Moscow would not reopen the pipeline after the scheduled work and accused Moscow of using energy as a “weapon”.
  • The showdown came amid the worst tensions in several years over Russia’s invasion of Ukraine.
  • Germany believes Russia is squeezing supplies in retaliation for Western sanctions over the war.

Why is Russian gas so important?

(1) Major chunk of energy

  • Russia supplied some 40% of Europe’s natural gas before the war.
  • That has dropped to around 15%, sending prices through the roof and straining energy-intensive industries.

(2) Everyday use

  • Gas is used across a range of processes that most people never see – to forge steel to make cars, make glass bottles and pasteurise milk and cheese.
  • Companies warn that they often can’t switch overnight to other energy sources such as fuel oil or electricity to produce heat.

(3) Fuel inflation

  • High energy prices are already threatening to cause a recession in Europe through record inflation, with consumers having less to spend as costs rise for food, fuel and utilities.
  • A complete cutoff could deal an even heavier blow to an already troubled economy.

What is visible in Russia’s game plan?

  • Since the invasion, Russia’s revenue from exporting oil and gas to Europe has doubled over the average from recent years, to $95 billion.
  • So Putin has cash in hand and could calculate that painful utility bills and an energy recession could undermine public support for Ukraine in Europe and increase sentiment for a negotiated settlement in his favour.
  • It would be unwise to exclude the possibility that Russia could decide to forgo the revenue it gets from exporting gas to Europe in order to gain political leverage.

What alternatives does Europe have?

  • The EU has turned to more-expensive liquefied natural gas, or LNG, which comes by ship from places like the US and Qatar.
  • Germany is fast-tracking construction of LNG import terminals on its North Sea coast, but that will take years.
  • But LNG alone can’t make up the gap.
  • Conservation and other energy sources are key.

Could people freeze this winter?

  • Its unlikely homes, schools and hospitals will lose heat because governments are required to impose rationing first on businesses.
  • The German government also could allow gas suppliers to immediately pass on increases to customers.
  • The choices could include torpedoing industry and/or socking consumers with even higher bills.
  • The IEA recommends that European countries step up campaigns for people to conserve at home and plan to share gas in an emergency.

 

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