Dusseldorf While fears of a gas shortage are growing among European companies, politicians and citizens, Russia has more gas than the population usually uses.
According to the Federal Association for Natural Gas, Oil and Geoenergy (BVEG), Russia produced more than 700 billion cubic meters in 2021. Of this, 400 billion cubic meters are usually used in Russia, and Russia exports 180 billion cubic meters to Europe via pipeline. The rest go to other markets, increasingly also to China.
Recently, however, Russia has reduced its gas supplies to Europe through the important Nord Stream 1 pipeline by 60 percent. Suddenly there are gigantic amounts in Russia that do not flow to Europe as usual.
There has been a lot of speculation recently about what Russia will do with this additional gas. BVEG Managing Director Ludwig Möhring says: “The media sometimes gave the impression that in the event of supply reductions or an embargo, Gazprom would not be able to technically deal with the reduction, to the point of the risk of having to flare off excess gas.”
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In fact, however, the situation for Russia does not appear to be as problematic as many previously assumed. Several factors allow Russia to reduce gas supplies without doing direct harm, apart from a lack of revenue from sales.
Russia is likely to consume more gas itself in the future
Gazprom boss Alexei Miller spoke at the St. Petersburg International Economic Forum in mid-June about Russia’s future handling of gas. He announced that in the future, Russia will focus more on gas in several sectors.
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Russia wants to deliver to China every year in the future. In 2021 it was 20 billion.
If gas is not sold, no new production capacity can be created, Miller continues. In addition, Russia now has an opportunity to restructure the global distribution system of energy resources and create new energy associations.
The less gas Russia supplies to the EU, the more Putin is oriented towards China. BVEG Managing Director Möhring says: “Russia will sell (small) parts of the quantities that are no longer delivered to Europe to other markets.” However, this is not easy logistically, since alternative pipeline connections and LNG liquefaction plants are limited.
From the current 20 billion cubic meters of natural gas last year, Putin wants to increase deliveries to China to up to 100 billion cubic meters in the medium term. But even this amount would not be enough to replace Europe, the largest customer to date.
As a result, a lot of natural gas just doesn’t get produced and stays in the ground. “We assume that in most cases only production from a few fields will be reduced,” says Möhring. “In doing so, Gazprom is likely to pursue an optimization of the entire production portfolio when reducing production.”
Stopping gas production is technically possible
However, BVEG Managing Director Möhring makes it clear: “It would be out of the question from a safety point of view if gas fields could not be shut down in a controlled manner.” Shutting down is possible for safety reasons if there is a problem with the drilling or in the downstream pipeline system or if maintenance is being carried out.
And further: “Technically, it is not only possible to reduce the production capacity from a natural gas deposit, but also to completely enclose a deposit and, in principle, this can also be done without risk to the recoverability of the gas reserve,” says Möhring.
According to information from the BVEG, practically all production fields in Russia are temporarily shut down every year as planned for inspection measures, so that the restarting of these fields is also technically proven. The costs for this are comparatively low.
The Gas Association of the Future also reports: “Even if other statements are made in various places: It is technically very unproblematic to ‘shut down’ a gas field.” Gas is not a liquid like oil and therefore does not press against the valves with high pressure and weight.
>> Read also: Gazprom supplies less gas to Europe – and earns almost as much
The German company Wintershall, which has been producing gas in Siberia together with a Russian company in recent years, reports: “In general, oil and gas fields can be temporarily closed, that is technically possible. However, any effects on the fields can vary greatly from person to person.”
In the event of a longer interruption, the formation of hydrates in a well could become problematic or, without the movement of fluids or carbon dioxide, corrosion could occur in the pipes, including in the lines and containers downstream of the well.
“Russia has the largest gas storage facilities in the world.” A spokesman for the Future Gas Association
When it comes to the costs, Wintershall is a little more pessimistic than the association: “These effects can be partially prevented or specifically rectified, but sometimes with a not inconsiderable amount of effort.”
Russia has large storage capacities
Even if Russia does not produce less gas immediately, the country can store large amounts of gas. A spokesman for the Zukunft Gas association says: “Russia has the largest gas storage facilities in the world.”
Tom Marzec-Manser, Head of Gas Analytics at the market research company ICIS, says: “Russia has natural gas storage facilities with a capacity of around 72 billion cubic meters.” Gazprom usually needs the whole summer to fill its storage facilities. There is currently no public data on how full the Russian gas storage facilities are, says Marzec-Manser.
But: “We can safely assume that the storage tanks will be refilled much earlier than usual – so probably months before the typical first of November, when the Russian heating season begins.”
Russia did not reduce gas production until March, although exports fell. Marzec-Manser also thinks it is likely that Russia is currently operating more gas-fired power plants than coal-fired power plants.
More: Germany’s largest gas importer asks for state aid – Uniper shares collapse.