As a company that works with resilience, we look at a crisis from all angles in our support of governments and organisations as they navigate uncertainty. Typically, any crisis has a domino effect that resonates far beyond the epicentre. The war in Ukraine is having, and will continue to have, a major impact on the energy sector. 4C energy expert Olle Crondahl explains more.
We are witnessing the power an energy-rich nation has over a region that is so dependent on it for energy. Despite the invasion, and the condemnation of it by the world’s governments, gas is still flowing through the Ukraine to Europe. The SWIFT sanctions that have been imposed are likely to have a devastating fiscal impact on Russian banks, but Sberbank and Gazprombank were not included in the sanctions because they are the main payment channels for Russian oil and gas, which many EU countries are still purchasing, despite the war.
Of course, Russia could withhold energy, but there are emergency energy stocks throughout Europe to counter the effects of this. But as it stands today, around 45 percent of Europe’s gas imports come from Russia – which explains why some European countries were less aggressive in their demands for sanctions. Of course, these countries have made agreements with Liquid Natural Gas (LNG) exporters in the case of an embargo.
Here in Sweden, where I’m based, the electricity supply comes from hydro and nuclear, along with a growing contribution from wind, so we are not that dependent on Russian gas – that is as long as the wind continues to blow. It’s when weather conditions change that we must import electricity. With regards to crude oil and petroleum products used in the transportation sector, we get around 10% of our total consumption from Russia, So, in that respect, we have good conditions to withstand an embargo.
Not surprisingly, across Europe we are going to see a major acceleration in the move to minimise dependency on Russian gas. I expect the shift to fossil-free energy, including wind and solar power, to ramp up quickly along with renewed interest in hydrogen and nuclear power, in the form of small reactors, as a more popular alternative to gas.
As for consumers, they will see their energy bills rise again. The price of petrol has already risen and gas prices have reached an all-time high as Russia’s attack on Ukraine puts even greater pressure on the oil market. The longer-term goals for minimising dependency will also require large-scale investment which will ultimately be financed by consumers, one way or another.
Another major consequence could see homes in Germany and Italy, among others, go without heating if the Russians decide to turn off the pipeline.
4C Consultant Olle Crondahl specialises in energy preparedness and business continuity in the utility industry. He is currently helping multiple energy companies increase their organisational resilience.
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