news Putin has another gas shock for us: the deindustrialisation of Europe
“Putin knows exactly what he is doing. He is targeting the electricity substations and the step-up transformers which are difficult to replace,” said Professor Alan Riley, an
energy expert at the Atlantic Council and an adviser to Ukraine. “He has complete sight of every target because he has detailed plans dating back from the Soviet Union. It is an
energy war on Ukraine and Europe at the same time,” he said. Helima Croft expects Russia to keep escalating through the winter with deniable sabotage of gas pipelines. We must
assume that nothing is off limits, given that Putin has already destroyed his own Nord Stream pipelines in the Baltic. “Infrastructure is vulnerable wherever the FSB [Russian
intelligence] is present. The Italians have diversified their gas supplies to Libya, Algeria, and Azerbaijan, and the FSB is operating in all of them,” she said. The new
Norwegian pipeline to Poland is a prime target. So are the Norwegian gas and power links to the UK. A clear attack on this infrastructure would trigger Nato's Article 5 clause on
alliance solidarity, probably a risk too many even for this bad Tsar. Murkier cases of disruption are another matter. There is no shortage of skittish EU states that would try to
block Article 5 escalation. Estonia was denied such support when its critical infrastructure was attacked. A Russian strike on North African terminals shipping gas to Italy could
be blamed on Jihadis, muddying the waters sufficiently to blunt any response. That is the soft underbelly of Europe's integrated gas nexus. Warm weather has given us false comfort.
So has the displacement effect of Beijing's zero-Covid policies. China has been reselling its contract deliveries of LNG to Europe to exploit the arbitrage spread. The country will
be the world's biggest buyer again as soon as it reopens. This fluke reprieve has allowed Europe to fill gas storage to 96pc. Germany reached 99.9pc earlier this month. Cargoes of
LNG have been anchored off-shore because there is nowhere to store the gas. The average winter price of benchmark TTF futures has dropped to €132 MWh from €350 during the
August panic. Unfortunately, this has been the calm before the next storm. “We have absorbed the shock only because Putin did not cut off gas flows completely. Some 24 BCM
(billion cubic meters) kept flowing through Ukraine and Turkey because Putin wanted to play his tricks and divide Europe,” said Thierry Bros, France's former head of energy
security. Even this is now drying up. On Tuesday, the Kremlin started to cut off the remaining gas flows to southern Europe via Moldova.