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HomeEconomicsVitality crunch threatens to shatter European unity, warns IEA boss

Vitality crunch threatens to shatter European unity, warns IEA boss


The top of the Worldwide Vitality Company has warned European international locations in opposition to a scramble for vitality safety this winter that threatens to shatter EU unity and set off social unrest.

Fatih Birol, the IEA’s government director, mentioned he feared “a wild west situation” if European international locations moved to limit their very own commerce or cease collaborating with neighbours amid mounting anxieties about gas shortages this winter.

“The implications will probably be very unhealthy for vitality, very unhealthy for the financial system, however extraordinarily unhealthy politically,” Birol mentioned Thursday in an interview on the inaugural World Clear Vitality Motion Discussion board in Pittsburgh. “If Europe fails this check in vitality, it could actually transcend vitality implications.”

European international locations have grown extra fractious as they attempt to keep a united entrance amid hovering vitality costs which have introduced the continent to the brink of an financial recession. However the mounting disaster has prompted fears that some international locations might minimize facet offers for Russian provide or limit energy exports to their neighbours.

There have been “two eventualities”, mentioned Birol, whose Paris-based watchdog company is principally funded by members of the OECD. “EU and members will work in solidarity, supporting one another . . . or there may be one other situation, if all people is for himself.”

“One of many founding values of the EU is solidarity. It is going to negatively have an effect on the EU’s weight the world over,” Birol mentioned of the latter situation.

Norway’s Nordic neighbours final month blasted Oslo for “egocentric” behaviour because it thought of pausing electrical energy exports whereas it refilled its hydroelectric reservoirs.

Andreas Bjelland Eriksen, state secretary in Norway’s petroleum and vitality ministry, denied it could halt exports, nevertheless, telling the Monetary Instances that the nation was merely “prioritising filling reservoirs for a similar motive as Europe is filling its fuel (storage)”.

The EU has confronted opposition from Hungary and another member states because it deepened sanctions on Russian in response to its invasion of Ukraine.

Birol additionally cautioned in opposition to European complacency after the continent succeeded in increase pure fuel stockpiles forward of the winter months when demand peaks.

Even when the continent prevented new “destructive surprises” in fuel provide, akin to a colder-than-expected winter, Europe would endure “bruises” within the coming months, Birol mentioned, together with financial recession and “vital harm to family budgets”.

The disaster for Europe would additionally final properly into 2023, he mentioned, given stagnant international provide and the probability of elevated competitors for liquefied pure fuel from a recovering China and different importers.

“Once we go searching there aren’t many new fuel [projects] coming . . . And the Norway, Algeria, Azerbaijan pipelines are close to their most capability. Will probably be one other difficult interval,” he mentioned.

However Birol was additionally adamant that Moscow had “already misplaced the vitality battle” with Europe because the continent seeks out different suppliers.

Most of Russia’s fuel and oil exports had gone to Europe earlier than the battle, he mentioned — however that was now over.

“Russia has misplaced shopper, and ceaselessly. This shopper paid the cash on time and didn’t create any political issues,” Birol mentioned.

The IEA chief dismissed Russian efforts to exchange Europe’s fuel market with exports to Asia. “You aren’t promoting onions out there. It’s a must to construct pipelines, infrastructure, logistics. This may take at the very least 10 years,” he mentioned.

Russia would additionally battle to take care of output as sanctions restricted its entry to the western know-how and capital it wanted to proceed repairing ageing oilfields and gasfields, Birol mentioned.

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