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France is preparing for the end of Russian gas

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From sobriety to rationing: in the space of a few days, the discourse has radically changed in Europe in the face of the fear of running out of gas next winter. On Thursday, March 31, Russia’s threat to no longer deliver gas to Western countries refusing to pay in rubles further heightened the tension. The European Union, which was planning to do without two-thirds of Russian gas by the end of the year, is seeing the timetable accelerate significantly.

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Germany and France “prepare” to a potential stoppage of Russian gas imports from 1er April, declared Bruno Le Maire, the Minister of the Economy, on a trip to Berlin. Between now and summer, given the reserves, Europe will not run out of gas. But this would undoubtedly lead to a further increase in prices. And there is great concern for next winter, despite the efforts made in Brussels to increase storage and diversify supplies, with the arrival of a lot of American shale gas.

Quickly reverse the flows from West to East

Different scenarios are being developed, depending on the volumes that can be bought on the market and traded from one country to another. “The European network was designed to bring gas from the East to the West. In the future, the flows will reverse with the increase in gas arriving by ship, but this will take time”, assures a specialist.

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For France, the increase in capacity at the Fos-Cavaou LNG terminal will last until 2024 according to GRTgaz. The creation of a floating structure off Le Havre should take two years, given the administrative procedures, even if the government does not rule out taking exceptional measures to go faster.

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Deliver less gas to large companies

France, which imports about 20% of its gas from Russia, would be less affected than others, such as Germany and central European countries. But the historically low level of EDF’s nuclear production seriously complicates the deal. The Saint-Avold coal plant (Moselle), supposed to have closed permanently on March 31, will probably have to restart in the fall for a few hundred additional hours.

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The authorities rule out any risk of a gas shortage, but want to prepare for any eventuality. A decree of “load shedding” is currently being examined by the Council of State and should be released in the coming days. It aims to organize the implementation of any cuts to the 5,000 largest industrial users of gas (more than 5 GW per year). An ultimate solution, used as a very last resort, assure the gas operators.

Businesses ask for help

The companies concerned will be consulted, by questionnaire, to find out if they can reduce or temporarily stop their consumption without major economic consequences. The prefectures will then draw up a list and set priorities.

“Everyone agrees to save gas, but it must be allocated as a priority to French industry”, protests Nicolas de Warren, the president of Uniden, which represents the most energy-intensive companies. “Some companies are already reducing their production on their own, because energy has become too expensive. All the efforts that have been made since the Covid crisis to reindustrialize Europe are in danger of being wiped out,” emphasizes Thérèse Sliva-Marion, from Cleee, another association bringing together high-consumption companies.

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Strong fears in Germany

In Germany, the government has created a crisis unit and is working on a similar load shedding system. In recent years, the country was 55% dependent on Russian gas, but this share has already fallen to 40%. Give up Russian gas “overnight” would lead to “plunge our country and all of Europe into recession”German Chancellor Olaf Scholz explained in an interview with the magazine Die Zeitpublished on March 23.

Across the Rhine, the shock is therefore likely to be brutal, even if, to save gas, coal-fired power stations are already called in as reinforcements. According to the insurer Allianz, a 1% drop in energy consumption by German industrialists, organized as a matter of urgency, could lead to the loss of 25,000 jobs.

In Japan, after the Fukushima accident and the shutdown of all the other nuclear reactors in 2011, the sharp rise in electricity and gas prices led to a demand destruction of around 10%. For Germany and Europe, the prospect of a recession would loom.

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The United States will draw on strategic oil reserves

The Biden administration, to drive down energy prices, will tap into strategic oil reserves like it never has before. Washington plans to release 1 million barrels per day on the market, the American president announced. This is to reduce the impact of rising energy prices caused by the war in Ukraine. Thursday, March 31, crude prices were down about 4%. The US Strategic Petroleum Reserves were created in 1975 to counter oil shocks.

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