Putin has another gas shock for us: the deindustrialization of Europe

“Putin knows exactly what he is doing. He focuses on the power substations and the step-up transformers that are difficult to replace,” says Professor Alan Riley, an energy expert at the Atlantic Council and adviser to Ukraine.

“He has full visibility on every target because he has detailed plans that date back to the Soviet Union. It is an energy war against Ukraine and Europe at the same time,” he said.

Helima Croft expects Russia to continue to escalate throughout the winter with deniable sabotage of gas pipelines. We must assume that nothing is off limits, as Putin has already destroyed his own Nord Stream pipelines in the Baltic Sea.

“Wherever the FSB is, the infrastructure is vulnerable [Russian intelligence] is present. The Italians have diversified their gas supplies to Libya, Algeria and Azerbaijan, and the FSB is active in all these areas,” she said.

The new Norwegian pipeline to Poland is a major target. This also applies to Norway’s gas and electricity connections with the UK. A clear attack on this infrastructure would trigger NATO’s Article 5 clause on alliance solidarity, probably too great a risk even for this evil czar.

More obscure cases of disruption are another matter. There is no shortage of skittish EU states that would try to block the escalation of Article 5. Estonia was denied such support when its critical infrastructure was attacked. A Russian attack on North African terminals carrying gas to Italy could be blamed on Jihadists, clouding the waters enough to put the brakes on any response. That is the soft underbelly of Europe’s integrated gas nexus.

Warm weather has given us false comfort. So is the crowding out effect of Beijing’s zero-Covid policy. China has resold its contract supplies of LNG to Europe to exploit the arbitrage spread. The country will once again be the largest consumer in the world once it reopens.

Thanks to this coincidence delay, Europe was able to fill its gas storage to 96 percent. Germany hit 99.9% earlier this month. Cargoes of LNG have anchored off the coast because there is no place to store the gas. The average winter price of benchmark TTF futures fell from €350 to €132 MWh during the panic in August. Unfortunately, this was the calm before the next storm.

“We only absorbed the shock because Putin did not completely cut off gas flows. Some 24 BCM (billion cubic meters) continued to flow through Ukraine and Turkey as Putin wanted to play his tricks and divide Europe,” said Thierry Bros, France’s former chief of energy security.

This is also drying up now. The Kremlin on Tuesday began cutting off remaining gas flows to southern Europe via Moldova.

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