Nothing Will be the Same in the Natural Gas Field
Russia is the EU's largest supplier of natural gas, using it for heating, cooking and hot water production in homes and public buildings, as well as in power generation and industry (International Energy Agency, 2022). In 2020, EU countries consumed 155 billion cubic meters of natural gas from Russia, which represented more than one-third of their total gas 35 consumption (Eurostat, 2022). The fact that Russia cut off gas flow to Europe brought about the loss of its reliable supplier title. But the leak in Nord Stream 1 is a candidate to determine what kind of natural gas logistics infrastructure will emerge in the future. Russia's cutting off gas flow to European countries in the past weeks was a critical development in terms of regional and global energy balances. This step ended Russia's reputation as a "reliable natural gas supplier", which had lasted for nearly half a century. In fact, considering that Moscow has maintained its position in this field thanks to this policy it has been following for years, it clearly reveals its trump card to Europe on gas. One might ask where this came from, but in recent years, a lot of water has flowed under the bridge in natural gas logistics, many things have changed, and it was inevitable that the balances would re-establish.
Figure 1: Russia shutting off gas exports to Europe. Nicola Jennings, 2022.
Until 15 years ago, it was not thought of a common use method for natural gas in European countries other than transportation by pipelines. This included using natural gas in liquefied form, that is, LNG. After all, liquefying the product and then turning it back into gas required significant energy expenditure, which made it inevitable that LNG would have a much higher cost than pipe gas. However, countries such as Japan and South Korea have been using LNG delivered to them by sea for a long time. Europe has also come a long way in the last 10 years, especially during the last five years, when it chose to transport and distribute natural gas in liquefied form. In this, the USA's serious investments in shale gas had a great impact. In the past, the USA, which was a natural gas importer, was able to go beyond meeting its own needs and export natural gas thanks to its shale gas investments. However, this was not enough to extract the gas for export. Sales channels were also necessary. The way to do this was to be able to sell to the old continent, that is, to European countries, which is the biggest natural gas consumption market.
Figure 2: Fracking here, fracking there. David Parkins, 2011.
There were serious obstacles to establishing such an infrastructure that would make the USA Europe's gas supplier. For one thing, the USA needed exit terminals to convert natural gas to LNG and load it on tankers. They got to work right away. On the Atlantic and Pacific coasts, terminals that were previously established for LNG purchase began to be transformed into LNG loading and sending terminals, and even new LNG loading facilities have been built next to them.
Meanwhile, LNG reception terminals were being established on the Atlantic coasts of Europe. Of course, these required large investments. It seemed necessary to go a long way to get to the desired point. While the USA and European countries, even Turkey, focused on working on them, Russia was not idle either. On the one hand, Moscow was establishing new transmission lines that would transport its own natural gas to the gates of Europe, on the other hand, it was taking steps and making progress in the newly developing LNG market.
Figure 3: Bear-backers. Dave Simonds, 2016.
While investments to establish gas pipelines, LNG receiving and loading terminals, and LNG tanker fleets continued simultaneously all over the world, there were many economic, political and military crises that could affect the energy issue. The civil war in Syria, annexation of Crimea, and war in the Upper Karabakh region of Azerbaijan under Armenian occupation were some of them. It is also useful to remember events such as the downing of a Russian plane in Turkish airspace during the conflict in Syria.
It has always been discussed whether Russia will use natural gas as a weapon during all wars, conflicts, and crises in near and far geographies. The title of Russia as the "Reliable Gas Supplier", supported by the argument that "it did not cut gas even in war or hot conflict", came from these processes. This title, which was protected in the first six months of the occupation of Ukraine, which started on February 24, 2022, despite the policy of "No gas for those who do not pay in rubles", has officially ended in the past weeks. Russia, which cut off the gas flow from Nord Stream 1 due to malfunctions before and several times, finally announced that it would cut off the gas flow to Europe.
Russia's cut of gas has raised concerns of whether Europe will freeze this winter, concerns that started in mid-summer. Efforts to take precautions against this possibility have intensified. The most well-known of these are the use of energy saving, extinguishing shop window lighting, increasing alternative energy supply opportunities to natural gas, and re-commissioning some energy facilities that have been decommissioned or announced to be closed before, such as coal and nuclear power plants. In the meantime, utmost care was taken to fill the old and newly built natural gas storage facilities to the brim, and it could be said that the gas storage facilities in European countries were almost completely full (the average occupancy rate was above 85%) just before Russia cut off the gas.
Figure 4: Power in 2030: The Roads We May Take. Elion Ryan, 2017.
The natural gas wars, which were always on the agenda in the 1990s with the competition of different energy suppliers, hence the pipeline routes, and with the efforts of the European Union to develop legislation to reduce dependency on Russia (ensure competition, etc.) evolved to the point. The embargo efforts of Europe on Russian gas and oil, which the USA wanted so much and even made great efforts to do so, began to yield results.
Figure 5: Russia may soon control Ukraine’s gas fields. L. Todd Wood, 2019.
After being the reliable gas supplier for the last 40 years, Russia cut off the gas flow to European countries and gave up this title, it is a matter of curiosity how things will evolve. While European countries continue their preparations for a winter where Russian gas will not flow, the messages "Accept the opening of the North Stream 2 Line, let's open the gas valves" from Russian leader Vladimir Putin apparently did not receive much response. However, another interesting development took place: the news that there were simultaneous gas leaks at three different points of the Nord Stream 1 gas pipeline, which has been feeding Europe for years.
It is not easy to convince people that this gas leak, which emerged in the middle of all the tensions, was a coincidence. The majority certainly believes in sabotage. So, what could hide behind such an attack on the pipeline? Many scenarios are possible, of course. Knowing that if Russian gas does not flow, there will be an energy shortage this winter and trying to take measures against it, would Europe render a gas pipeline dysfunctional in case of a possible agreement? The probability is low.
Figure 6: A Wildcatter Pounces. Jad Mouawad, 2007.
If natural gas continues to maintain its place in global energy consumption, it is not necessary to be a prophet to say that LNG and CNG will be on the agenda more on the logistics side. Life knows no gaps, it spoils the hard game. It is certain that pipelines will not be enough for the transportation and distribution of natural gas, which is increasingly used by energy suppliers and consumers. In fact, it can be said that the world will move towards a widespread LNG infrastructure that will ensure energy supply security. Just as there are unlimited options in the supply of petroleum-derived products, especially gasoline and diesel, it may be possible to move towards a similar point in natural gas. Of course, considering that the kilowatt-hour (kWh) unit instead of cubic meters or tons in energy has become a more common expression, it is possible to say that the industry may evolve to other unpredictable places.
Eurostat, 2022. Imports of natural gas by partner country. [Data] Retrieved from https://data.europa.eu/data/datasets/avutxvbh1pgllpesw30g?locale=en
International Energy Agency, 2022. Reliance on Russian Fossil Fuels in OECD and EU Countries. [Data] Retrieved from
Figure 1: Jennings N., (2022). Russia shutting off gas exports to Europe. The Guardian. [Photo]. Retrieved from https://www.theguardian.com/commentisfree/picture/2022/sep/04/nicola-jennings-on-russia-shutting-off-gas-exports-to-europe-cartoon
Figure 2: Parkins D., 2011. Fracking here, fracking there. The Economist. [Photo]. Retrieved from https://www.economist.com/business/2011/11/26/fracking-here-fracking-there
Figure 3: Simonds D., 2016. Bear-backers. The Economist. [Photo]. Retrieved from
Figure 4: Ryan, E., 2017. Power in 2030: The Roads We May Take. The New York Times. [Photo]. Retrieved from https://www.nytimes.com/2013/11/28/opinion/power-in-2030-the-roads-we-may-take.html
Figure 5: Tood Wood L., 2019. Russia may soon control Ukraine’s gas fields. The Washington Times [Photo]. Retrieved from
Figure 6: Mouawad, J., 2007. A Wildcatter Pounces. The New York Times. [Photo]. Retrieved from https://www.nytimes.com/2007/05/20/business/yourmoney/20wildcat.html