Europe energy crisis: Western sanctions backfire

As the weather gets colder in Europe, the efforts for curbing gas and electricity consumption are reaching their limits and the short-lived relief the union was celebrating over the past few months is starting to fade.

Before the Ukraine war, Russia contributed to the lion’s share of Europe’s energy imports, however, the conflict, now in its ninth month, disrupted that partnership, and no more gas is flowing through Nord Stream 1.

The energy crisis in Europe can be considered from two major aspects: the short-term effects and challenges, and the long-term impacts and solutions.

A short-lived relief

Although considering the condition of the union’s storage facilities which according to the International Energy Agency (IEA) are currently 95 percent full, Europe might be able to pass through this year’s winter but there is a heavy price that it must pay in doing so.

Businesses across Europe are not just curbing their energy use and continuing on a business-as-usual basis. They are shutting down factories, downsizing, or relocating. Europe may well be on the way to deindustrialization. The eurozone manufacturing activity has fallen to the lowest since May 2020.

The October reading for S&P Global’s PMI signaled a looming recession, falling on November and being the fourth monthly reading below 50 – an indication of an economic contraction.

Long-term consequences

In its latest analysis of the Europe energy crisis published on November 3, the IEA said that the union could face a shortage of as much as 30 billion cubic meters (bcm) of natural gas during the next year’s pick summer period for refilling its gas storage sites.

In the report dubbed “Never too early to prepare for next winter: Europe’s gas balance for 2023-2024” IEA cautions that the cushion provided by current storage levels, as well as recent lower gas prices and unusually mild temperatures, should not lead to overly optimistic conclusions about the future.

“With the recent mild weather and lower gas prices, there is a danger of complacency creeping into the conversation around Europe’s gas supplies, but we are by no means out of the woods yet,” said IEA Executive Director Fatih Birol.

The price of sanctions

A look at the IEA report shows that the European Union is going to face a great challenge in meeting its energy needs in the coming years and considering the heavy costs of shipping gas from long distances, Iran could have been a significant contributor to the resolution of this issue.

Having the world’s biggest gas resources, the Islamic Republic could provide Europe with the energy it desperately needs if the infrastructure for a pipeline were there or if the constant sanctions have not had prevented Iran from accessing the technology required for liquefying natural gas on large scales.

Unlike oil, natural gas is hard to be shipped on large scales in the form of gas, and therefore it is exported either through pipelines or by turning it into Liquified Natural Gas (LNG), but that is an expensive and high-investment proposition. Iran currently does not have the infrastructure to export large amounts of gas to Europe.

Despite all these limitations, the Islamic Republic has constantly voiced its readiness to help Europe ease at least part of its energy demand.

In early October, Iran’s Deputy Foreign Minister Ali Baqeri Kani highlighted the impact of sanctions on energy security in Europe amid the Russia-Ukraine war and voiced Tehran’s preparedness to help restore energy security to the continent.

“It was thought for many years that countries like Iran should pay the cost of being sanctioned [but] now the Europeans have realized that imposing sanctions has also a price,” Baqeri Kani said.

Considering the current experiences and looking into the future, European governments should see clearly the negative impacts that the sanctions have had and are going to have on global energy security and therefore more efforts should be made to help the nuclear talks reach the “ending” that would be a “win-win” scenario for both sides.

From our partner Tehran Times