Biden administration moves to cover European gas shortfalls if Russia invades Ukraine

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The Biden administration is talking with energy companies and major gas-producing nations to ramp up production in case a Russian invasion of Ukraine leads to winter fuel shortages in Europe, a senior administration official told reporters Tuesday.

Global leaders fear Russia could weaponize its gas deliveries to Europe if the West imposes harsh sanctions on Moscow over a potential attack on Ukraine. Russian companies supply roughly a third of the natural gas used by Europe.

“We’ve analyzed the impacts of potential disruptions and we’re going to work to ensure Europe has alternative energy supplies,” the official said on a conference call with reporters.

The official said the U.S. is exploring contingency options to redirect and increase gas supplies from different parts of the world.

The official declined to name specific countries and companies the U.S. has engaged, citing the “sensitivity” of the talks.

Fears over a gas shortage come as energy prices reach record highs across the globe and Russia‘s Gazprom is already producing less than its normal supply targeted for Germany and other Western European markets.

Russian exports of main grade crude oil will drop to their lowest level in February, according to the International Monetary Fund. The world’s second-largest oil exporter will ship 1.31 million barrels a day of its crude next, the smallest flow since September. Much of that crude is shipped to refineries in northwest Europe.

The slump coincides with the lowest levels of maintenance at Russian refineries in about two years as the pandemic and rising costs have made it difficult to keep the crude pumping.

The International Energy Agency earlier this month accused Russia of undermining Europe’s gas supply as tensions over Ukraine continue to simmer. It said Russia could increase deliveries to Europe by at least a third, noting that Moscow is delivering more natural gas to China than its contractual commitment requires.

Moscow has insisted that it has fulfilled its European contracts, but some European lawmakers accused Russia of using the energy crisis as leverage in talks about Ukraine, NATO and security policy in Eastern Europe.

European leaders have begun pressuring Germany to stop the Nord Stream 2 gas pipeline. The $11 billion pipeline would run from Russia into Germany, doubling Russia’s gas export capacity to Western European markets.

NordStream 2 is officially completed, but it is still not operational. Berlin, which pushed allies to support the project, is now weighing the idea of stopping the pipeline in the event of a Russian attack on Ukraine.

Although the U.S. is preparing for the possibility of Russia exploiting its position as a major oil and gas producer in the crisis, the official emphasized that such an action could ultimately harm the Russian economy.

“If [Russian President Vladimir] Putin weaponizes the energy supply, he is creating a major incentive for Europe to accelerate the diversification of their energy supplies away from Russia. And that would further remove an opportunity for Russia to earn revenues on the export side,” the official said.

Russia has moved to cut gas supply to Ukraine in the past. In 2014, Moscow turned off the taps after complaining that Ukraine failed to pay its debts to Gazprom, the giant state-run energy corporation that supplies gas.

It was not the first time Russia cut supply to Ukraine because of price disputes, taking similar actions in 2006 and 2008-09. All three of those disputes led to gas shortages elsewhere in Eastern Europe because Russia’s main supply lines run through Ukraine to the West.





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