(Financial World) " Beixi-1" is closed indefinitely, what does it mean for Europe?
China News Service Beijing, September 4th Title: What does "North Stream-1" close indefinitely means for Europe?
Author Liu Wenwen
Russian Natural Gas Industry Corporation (Russia Gas) recently announced that when jointly repairing the turbine of the "Portovaya" compressor station with a representative of German Siemens, multiple equipment leaked oil, and the "North Stream-1" natural gas pipeline will completely stop gas transmission until the troubleshooting is solved. What does
"North Stream-1" close mean? What impact will it have on Europe's energy and economy?
Data map: Pipeline of the "Beixi-2" natural gas pipeline project login facility.
"North Stream-1" closed indefinitely
"North 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 gas transmission volume exported by Russia to Europe through the "North Stream-1" pipeline has been greatly reduced this year.
Gas announced at the end of August that the only turbine, the "North Stream-1" natural gas pipeline, will be shut down for maintenance for three days from August 31. Affected by this news, European natural gas futures hit a record closing high.
After the original planned equipment maintenance work is over, "Beixi-1" will restore gas supply of 33 million cubic meters per day. However, the developments exceeded expectations. With the announcement of the "North Stream-1" indefinitely, the European energy market, which could have been slightly relaxed, has become tense again.
Winter is approaching, Europe "makes worse"
Europe does not seem to panic about the news that "North Stream-1" is closed indefinitely.
According to reports, EU officials revealed that based on storage capacity and energy-saving measures, the EU has "full preparations" for Russia's complete suspension of gas.
According to data from European natural gas infrastructure, as of September 2, the EU's natural gas storage capacity has reached 81.17%. This means that the EU has achieved its previously set goal, that natural gas storage capacity will reach at least 80% of the total capacity by November 1. Is the situation in
really so optimistic? In fact, even if you fill the gas tank , Europe may not be able to rest assured this winter.
Previously, a model from data intelligence company ICIS has shown that if countries cannot reduce fuel use, European natural gas inventory will be consumed in March next year, even if a small amount of Russian natural gas is continuously supplied throughout the winter and there is no abnormally cold weather.
"From the current perspective, there is no hope of restarting the 'Beixi-1' pipeline in the short term." The energy and chemical research team of Everbright Futures analyzed that this is even more "injury" for Europe, where natural gas supply is already tight.
Since the beginning of this year, European energy prices have soared several times, and under the current circumstances, prices may further boost.
Faced with soaring natural gas and electricity bills, more than 20% of British families plan to completely turn off heating in the winter, and some British people have begun stocking up on charcoal for winter use. A head of the UK's largest firewood supplier said firewood demand in the UK is expected to increase by 10% to 20% this winter compared to last year. Although firewood prices have risen, they are far less than the increase in energy prices.
European economic recession may be "inevitable"
As the "North Stream-1" pipeline "drained", European natural gas prices will soar again, making industries and manufacturing industries that rely heavily on natural gas more difficult, and the European economy may face an inevitable recession.
EU agency " European Stability Mechanism " analyzed that if Russia stops natural gas supply, it may cause eurozone countries to exhaust their natural gas reserves by the end of the year, and Italy and Germany may lose 2.5%.
Italian Federation of Industrialists Chairman Bonomi recently said that if Russia completely interrupts the supply of natural gas to Italy, it may cause one-fifth of the country's industrial production to be suspended.
Goldman Sachs believes that the ongoing energy crisis has further weakened the growth prospects in Europe, and recessions are expected in the UK and the euro zone. If natural gas supply remains tight, Europe will be in a recession longer and the degree of recession will deepen.
How does Europe deal with the upcoming challenges?
Xiamen University China Energy Policy Research Institute Director Lin Boqiang told China News Service that Europe is doing its best to get rid of its dependence on Russia's energy, but various emergencies have caught him off guard. The current inflation level in Europe is very high, and the "death of gas" means that gas prices will rise further, which is indeed quite tricky for Europe. Even if Europe and Canada eventually sign an energy contract, it will take several years to build infrastructure, and it will require huge capital investment.
"This winter is the most difficult." Lin Boqiang said that restarting coal-fired power, cutting trees and burning firewood, reducing energy consumption are all measures to ensure energy security in Europe in the short term. In the long run, low-carbon new energy will remain the main goal of its development. (End)
