‘Russia will lose the energy battle,’ says IEA chief Fatih Birol

Russia will lose the power battle it’s waging in opposition to the West, in line with Fatih Birol, the chief director of the Worldwide Vitality Company (IEA).

“Simply earlier than the invasion [of Ukraine], about 65% of the Russian whole gasoline exports went to Europe and 55% of the Russian oil export went to Europe,” Birol informed Euronews on Friday afternoon.

“Europe was by far the most important market, the most important shopper for Russia, and Russia misplaced this shopper endlessly. The largest shopper.”

Birol’s feedback appeared to consult with the retaliatory motion that the European Union has taken in response to the Ukraine struggle: a near-total oil embargo of Russian gasoline and a extremely costly push to diversify gasoline suppliers, primarily by liquefied pure gasoline (LNG).

Requested if Russia might exchange European purchasers with different areas, Birol stated that might not be simple as a result of “an enormous chunk” of Russian gasoline originates in Western Siberia after which flows to Europe by way of pipelines.

Constructing brand-new pipelines to China or India might take as much as 10 years, he predicted, and a big quantity of know-how and funding.

“You aren’t promoting onions available in the market, you’re promoting pure gasoline. It is a completely different enterprise,” Birol stated. “So to interchange the pure gasoline exports to Europe with Russia is, within the brief time period, a pipe dream.”

However Russia will not be the one nation going by troubled occasions.

In his interview with Euronews, recorded on the IEA’s headquarters in Paris, Birol spoke of a world disaster of unprecedented scope and attain, wreaking havoc in all corners of the world.

“We’re in the midst of the primary really world power disaster. Our world has by no means, ever witnessed an power disaster with this depth and with this complexity,” he stated.

“Within the Seventies, we had an oil disaster, however it was solely oil. Now we have now oil, pure gasoline, coal, electrical energy. The reason being quite simple: Russia, the nation that invaded Ukraine, is the most important power exporter of the world.”

‘Subsequent winter could also be even tougher’

Birol described Europe because the “epicentre” of the storm and characterised its decades-long reliance on low-cost Russian fuels as a “mistake” on the root of the current disaster.

The IEA chief predicted the continent will be capable to make it by the upcoming winter with just a few “financial and social bruises” and no main harm — however provided that the winter “will not be too lengthy and never too chilly, and if there aren’t any main surprises.”

Birol, nevertheless, expressed larger concern in regards to the 2023-2024 winter, citing three key components: Europe’s absence of Russian gasoline, China’s financial restoration and tighter situations within the LNG markets.

“Within the subsequent few years, we have now to be prepared [to deal] with risky and excessive power costs and we have now to seek out options,” he stated. “However to be very frank, this winter is troublesome and subsequent winter could also be even tougher.”

Requested about the continued debate a few potential EU-wide cap on gasoline costs, Birol stated it may very well be a “good concept” so long as the cap is broad sufficient to maintain the bloc as a horny shopper for LNG producers.

This 12 months’s profitable re-filling of underground storage – crammed to over 93% of capability – was the results of Europe paying “extra money” than different LNG purchasers.

“If we put the worth cap too low, then our aggressive energy can be a lot much less,” Birol defined.

Concerning joint purchases of gasoline, a proposal that has gained extra traction amongst EU nations, the IEA chief that if European nations handle to “emerge as a powerful purchaser,” they may out-bid different LNG prospects around the globe.

Talking about oil, Russia’s main income, Birol didn’t conceal his displeasure about OPEC’s newest choice to chop manufacturing by two million barrels per day in a bid to extend costs. He argued the world’s main oil cartel ought to have acted extra responsibly in a time of disaster.

“Now, they determined to scale back their oil manufacturing, which can push the worth up. Due to this fact, the inflation [will go] up and the worldwide economic system could go into recession,” he stated.

“It is a very dangerous and in my opinion, unlucky choice.”