Times article 15/7/2215 Jul 2022 17:47
Headline: “Rationing looms as gas prices soar. Energy bosses warn of serious Russian threat”.
Europe may have to ration energy this winter if Russia cuts off the gas while Britain will also face “really, really high prices”, senior energy leaders have warned.
The bosses of Shell and National Grid’s electricity system operator (ESO) both issued stark warnings about the bleak winter ahead, after President Putin threatened that sanctions could result in catastrophic consequences for energy markets.
Ben van Beurden, Shell chief executive, said President Putin had shown that “he better be taken seriously when he makes threats” and called on European leaders to put “very significant contingency plans” in place.
“I think we will be facing a really tough winter in Europe. Some countries will fare better than others but I think we will all be facing very significantly escalating pricing,” he told the Aurora Spring Forum, an energy conference in Oxford. “In a worst case, we will be in a situation where we have to ration.”
Fintan Slye, director of National Grid ESO, the division responsible for keeping the lights on, said that while the UK was less dependent on flows of Russian gas than its continental European neighbours, “you can’t get past the fact that if there is a shut-off of Russian gas into Europe, then the implications of that will still ripple through into the UK”. That would mean “really, really high prices”, he warned.
National Grid ESO is due to publish its initial outlook for winter energy security later this month. Slye said Britain should have sufficient power plants available, with forecast margins comparable to last winter. “The bigger risk that we do need to be conscious of is the risk to European energy security of supply that’s being caused by Putin’s invasion of Ukraine. Undoubtedly that presents challenges this winter and will make security of supply across Europe potentially quite difficult,” he said.
National Grid has been putting preparations in place such as contracts to keep coal-fired power plants open as a “very sensible insurance policy” for the winter.
Van Beurden of Shell said it had long been assumed that it was not in Russia’s interest to curtail European supplies because it would make European markets “forever distrustful” of Russian supplies. Van Beurden had in the past made the case that Europe needed Russian gas, and Shell has a stake in the Nord Stream 2 pipeline to Germany that has been built but is now never expected to start operating. Van Beurden admitted that President Putin had “surprised quite a few of us” with his willingness to weaponise energy and said it would now be “unwise” to dismiss the risk of gas supplies being curtailed.
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