"North Stream-1" is closed indefinitely, what does it mean for Europe?

(Finance and Economics) "Beixi-1" is closed indefinitely, what does it mean for Europe?

　　China News Agency, Beijing, September 4th: "Beixi-1" is closed indefinitely. What does it mean for Europe?

　　Author Liu Wenwen

　　Russia's Gazprom (Gazprom) recently released a message saying that during the maintenance of the turbines of the "Portovaya" compressor station together with representatives of Germany's Siemens, it found that there were many oil leaks in the equipment, and the "North Stream-1" natural gas The pipeline will stop delivering gas completely until the fault is rectified.

　　What does the closure of "North Stream-1" mean?

What are the implications for European energy and the economy?

Data map: The pipeline of the "Beixi-2" natural gas pipeline project landing facility.

"North Stream-1" closed indefinitely

　　The Nord Stream-1 pipeline is one of the most important gas pipelines between Russia and Europe.

Due to several gas reductions and unplanned maintenance in the first half of the year, the volume of gas exported from Russia to Europe through the "Beixi-1" pipeline has been greatly reduced since the beginning of this year.

　　Gazprom announced at the end of August that the only turbine still in operation in the "Beixi-1" natural gas pipeline will be shut down for maintenance for three days from August 31.

Affected by the news, European natural gas futures closed at a record high.

　　After the originally planned equipment maintenance work, "Beixi-1" will restore the gas supply of 33 million cubic meters per day.

However, developments have exceeded expectations.

With Gazprom announcing the indefinite closure of Nord Stream-1, the European energy market, which could have been relaxed a little, was tightened again.

Winter is approaching, Europe's "worse"

　　Europe does not seem to be panicking about the news of the indefinite closure of "North Stream-1".

　　According to reports, EU officials revealed that the EU is "fully prepared" for a complete gas shutdown in Russia based on storage capacity and energy-saving measures.

　　According to data from European Gas Infrastructure, as of September 2, the EU's natural gas storage capacity has reached 81.17%.

This means that the EU has completed the previously set goal of natural gas storage reaching at least 80% of its total capacity by November 1.

　　Is the situation really so optimistic?

In fact, even if the gas tanks are filled, Europe may not be able to sit back and relax this winter.

　　Previously, models from data intelligence company ICIS have shown that if countries fail to reduce fuel use, European gas inventories will be depleted in March next year, even though there is a continuous supply of Russian gas throughout the winter, and there is no unusually cold. weather conditions.

　　"From the current point of view, the 'Beixi-1' pipeline has no hope of restarting in the short term." The research team of Everbright Futures Energy and Chemical Analysis analyzed that this is even more "worse" for Europe, where natural gas supply is already tight.

　　Energy prices in Europe have soared several times this year, and in today's circumstances, prices could rise further.

　　Facing soaring gas and electricity bills, more than 20% of British households plan to turn off their heating completely in winter, and some Britons have started stockpiling charcoal for winter use.

Demand for firewood in the UK is expected to increase by 10% to 20% this winter compared to last year, a head of the UK's largest firewood supplier said.

While firewood prices have risen, they are nowhere near as much as energy prices.

European recession or 'inevitable'

　　As the "North Stream-1" pipeline is "stopped", the price of natural gas in Europe will soar again, making it more difficult for the industries and manufacturing industries that rely heavily on natural gas, and the European economy may face an inevitable recession.

　　According to the analysis of the European Stability Mechanism, an EU institution, if Russia stops natural gas supply, it may lead to the exhaustion of natural gas reserves in euro zone countries by the end of the year, and the GDP of Italy and Germany may lose 2.5%.

　　Bonomi, president of the Federation of Italian Industrialists, said recently that if Russia completely cuts off the supply of natural gas to Italy, it may cause one-fifth of the country's industrial production to stop.

　　Goldman's view is that the ongoing energy crisis has further weakened Europe's growth prospects, with recessions expected in the UK and the euro zone.

If gas supplies remain tight, Europe's recession will be longer and deeper.

How can Europe meet the upcoming challenges?

　　Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University, told China News Agency that Europe is going all out to get rid of its dependence on Russia for energy, but various emergencies have caught it off guard.

The current level of inflation in Europe is very high, and "stopping gas" means that gas prices will rise further, which is indeed quite tricky for Europe.

Even if Europe eventually signs an energy contract with Canada, it will take years to build infrastructure, and it will require huge capital investment.

　　"This winter is the hardest." Lin Boqiang said that restarting coal and nuclear power, cutting trees and burning firewood, and reducing energy consumption are all measures to ensure short-term energy security in Europe.

In the long run, low-carbon new energy is still the main goal of its development.

(Finish)