Written by 7:58 pm Europe Economy

European gas shortages likely to last several winters, says Shell chief | Gas

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

Cuts to the supply of Russian gas since the invasion of Ukraine have plunged European countries into a devastating energy crisis, driving up wholesale prices to leave consumers facing huge bills and the highest rates of inflation since the 1980s.

Speaking at a press conference in Norway on Monday, Ben van Beurden said the situation could persist for several years. “It may well be that we will have a number of winters where we have to somehow find solutions,” he said.

Van Beurden said solutions to the energy crisis would have to found through “efficiency savings, through rationing and a very, very quick buildout of alternatives”.

“That this is going to be somehow easy, or over, I think is a fantasy that we should put aside,” he added.

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

Russia, the major supplier of gas to most of the EU before the war in Ukraine, has throttled exports in response to western sanctions imposed since Vladimir Putin’s invasion six months ago. While not all EU countries are directly reliant on Russian supplies, competition for scarce resources has pushed wholesale European gas prices up by a factor of 12 compared with a year ago.

Britain sources little of its gas directly from Russia, although is exposed to soaring prices on the wholesale market. Liz Truss, who is likely to be the next British prime minister, has so far refused to spell out what help she would give to households as the price cap on energy bills jumps 80% to £3,549 a year from October.

Speaking on Monday, the president of the European Commission, Ursula von der Leyen, said a package of emergency measures would be unveiled soon. 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 in addition to longer-term energy market reforms.

“Skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design,” she said.

The French prime minister, Elizabeth Borne, warned companies that energy could be rationed this winter, while Belgium’s energy minister said the next five to 10 years could be difficult.

Speaking alongside the Shell chief executive in Norway, the head of another energy company, TotalEnergies’s Patrick Pouyanné, said Europe’s governments and policymakers would have to plan for a future without Russian gas.

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

European gas prices have soared in recent weeks, reaching almost €350 (£299) a megawatt hour last week as countries rushed to build up supplies before the winter. The Ukrainian president, Volodymyr Zelenskiy, on Monday accused Russia of “economic terror” by trying to cut gas supplies to Europe.

“It is exerting pressure with price crisis, with poverty, to weaken Europe,” he said.

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

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

Soaring energy prices have helped oil and gas companies to record bumper profits, prompting demands for windfall taxes to help finance emergency support for struggling households and businesses. Shell made record profits of nearly £10bn between April and June and promised to give shareholders dividends worth £6.5bn.

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