The European Union should be able cope with the natural gas supply shortage in the next months due to its large reserves, although Europe could face an even bigger energy crisis next winter.
Fatih Birol stated that Europe will weather the winter without any unexpected events. This is due to efforts to wean off Russian gas and the larger increase in energy prices resulting from the conflict in Ukraine.
He said, “Next winter will prove more difficult than this winter.”
Birol mentioned the fact that Russian gas supplies may cease completely to Europe next year. However, China’s demand to liquefied natural gases looks poised to recover as it recovers from the pandemic.
He said that the IEA expects new gas capacity to come online in 2023, which will be the lowest level in the past two decades.
Birol stated that Europe must prepare for next year because of this, and added that solidarity was key to European unity.
The IEA chief stated that Russia can expect to suffer some of the costly consequences of its fallout with European energy buyers, as well as the negative effects it could have on Ukraine.
Moscow must find new markets to sell its gas and oil, as 75% of Russia’s exports of it is to Europe, he stated.
Birol said it was “completely wrong to assume Russia will just deliver to Asia.” He noted that pipelines through Siberia could take 10 years to construct and that oil tankers would need to travel ten times longer to the East than to Europe to reach their clients.
Due to sanctions, specialized oil-and-gas technology companies have left Russia. This means that production at difficult extraction sites will likely fall.
Birol stated that Russia is likely to lose the energy fight big time. He also said that the IEA calculated that Moscow would lose around $1 trillion in revenue by 2030 due to its conflict in Ukraine.
Birol acknowledged that the energy crisis has serious consequences for developing countries, but he said it would accelerate the transition to alternative fuels.
He said, “When I consider the efforts to ensure energy security, climate obligations, and industrial policy drivers I am optimistic that this current energy crisis will mark a turning point for the history of energy-policy making.”
Birol said that this will still require a fivefold increase in clean-energy investments than today.