Gas shortages in Europe set to last several winters, says Shell boss | Gas

Gas shortages across Europe are expected to last for several winters, the Shell chief executive said, raising the prospect of continued energy rationing as governments across the continent scramble to develop alternative supplies.

Cuts in Russian gas supplies since the invasion of Ukraine have plunged European countries into a devastating energy crisis, driving up wholesale prices, leaving consumers facing huge bills and the worst inflation rates. higher since the 1980s.

Speaking at a press conference in Norway on Monday, Ben van Beurden said the situation could persist for several years. “We may well have a number of winters where we have to find solutions one way or another,” he said.

Van Beurden said solutions to the energy crisis should be found through “efficiency savings, through rationing and very, very fast building of alternatives”.

“Whether it’s somehow easy, or done, I think that’s a fantasy that we should put aside,” he added.

His comments come as Europe’s biggest economies brace for a tough winter marked by runaway inflation and the threat of a recession, as record rises in gas and electricity bills put pressure on households and businesses across the continent.

Russia, the main gas supplier to most of the EU before the war in Ukraine, has limited its exports in response to Western sanctions imposed since Vladimir Putin’s invasion six months ago. Although not all EU countries are directly dependent on Russian supplies, competition for scarce resources has increased European wholesale gas prices 12 times compared to a year ago.

Britain sources little gas directly from Russia, although it is exposed to soaring prices on the wholesale market. Liz Truss, who is likely to be Britain’s next prime minister, has so far refused to say how much help she will give to households as the price cap on energy bills jumps 80% to £3,549 a year from of October.

Speaking on Monday, European Commission President Ursula von der Leyen said a set of emergency measures would soon be unveiled. Speaking in Slovenia as EU officials work on a plan, which could be announced as early as this week, Von der Leyen said “emergency interventions” would be introduced on top of longer-term reforms of the energy market.

“The spike in electricity prices now exposes, for different reasons, the limits of the current design of our electricity market,” she said.

French Prime Minister Elizabeth Borne has warned businesses that energy could be rationed this winter, while Belgium’s energy minister has said the next five to 10 years could be difficult.

Speaking alongside Shell’s managing director in Norway, the head of another energy company, Patrick Pouyanné of TotalEnergies, said European governments and policymakers should plan for a future without Russian gas.

The comments were made at a ceremony marking a carbon capture and storage agreement between the two companies, the Financial Times reported. “If you think without it [Russian gas], we will manage. There is enough energy on this planet to do without it,” Pouyanné added.

Gas prices in Europe have soared in recent weeks, hitting nearly €350 (£299) a megawatt hour last week as countries rushed to stock up ahead of winter. Ukrainian President Volodymyr Zelenskiy on Monday accused Russia of “economic terror” by trying to cut off gas supplies to Europe.

“It exerts pressure with the price crisis, with poverty, to weaken Europe,” he said.

Maintenance work is expected to take place this week by Russian state-owned Gazprom on the Nord Stream 1 gas pipeline that connects Russia and Germany via the Baltic Sea, complicating efforts to fill gas storage sites.

Wholesale gas prices fell on Monday after Germany’s economy minister said he expected the country’s storage to be 85% full next month. However, prices are still more than triple the level at the start of this year.

Soaring energy prices have helped oil and gas companies post windfall profits, prompting calls for windfall taxes to help fund emergency aid to struggling households and businesses. Shell made record profits of nearly £10bn between April and June and promised to pay shareholders dividends worth £6.5bn.