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Europe gas shortages to last several winters, Shell boss warns

Sunday Telegraph

Europe gas shortages to last several winters, Shell boss warns

Ben van Beurden says energy rationing will be needed for a number of years

By Rachel Millard: 29 August 2022 • 12:54 pm

Europe’s energy crisis will last for several winters, the boss of Shell has said, as he warned it is “fantasy” to think shortages caused by Russia cutting supplies can be resolved quickly.

Ben van Beurden told a conference in Norway that power rationing will be needed for a number of years as electricity prices hit fresh record highs.

He said: “I do not think this crisis is going to be limited to just one winter.

“It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing, and through a very quick build out of alternatives that you may have [such as] alternative gas imports [and] hopefully alternative energy sources.”

On Monday, Belgium’s energy minister, Tinne Van der Straeten, called for European gas prices to be urgently frozen, saying the next “five to 10” winters will be “terrible” without urgent action.

Europe has been plunged into turmoil by cuts to Russian gas supplies as the Kremlin hits back at sanctions imposed following its war on Ukraine.

Russia typically supplied about 40pc of the EU’s gas before the war, with countries including Germany among the most reliant.

Soaring prices as countries compete for scarce supplies have triggered a major cost of living crisis while several major industrial energy users have been forced to curb production.

Britain gets little gas directly from Russia but is exposed to the surge in prices, with the annual price cap on household energy bills set to rise by 80pc in October to £3,549.

Problems and maintenance of EDF’s nuclear fleet in France have also worsened the strain on electricity markets.

On Monday, forward power prices in Germany climbed above €1,000 per MWh for the first time – about 20 times higher than historic long term averages.

Nervousness over gas supplies is rising ahead of a three-day shut-down from Wednesday of the Nord Stream 1 pipeline under the Baltic Sea to Germany.

Gazprom, Russia’s state-owned gas giant, announced the previously unscheduled maintenance earlier this month, triggering concerns over whether it will re-open.

The pipeline is already running at only 20pc of capacity, complicating efforts in Germany and elsewhere to fill up gas storage sites ahead of winter.

Volodymyr Zelensky, Ukraine’s president, on Monday said Russia was trying to prevent European nations from filling gas storage sites enough to cope with winter.

The head of Germany’s energy regulator said Germany was making better progress than expected in filling its gas storage, but further supplies would be needed.

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