Gas shortages in Europe are likely to last several winters, Shell’s chief executive has said, raising the prospect of continued energy rationing as governments across the continent push to develop alternative supplies.
Cuts in Russian gas supplies since the invasion of Ukraine have plunged European countries into a devastating energy crisis, pushing up wholesale prices and leaving consumers facing huge bills and tariffs highest inflation since the eighties.
At a press conference in Norway on Monday, Ben van Beurden said the situation could persist for several years. “We may have a few winters where we have to find solutions somehow,” he said.
Van Beurden said solutions to the energy crisis should be found through “saving efficiency, through rationing and creating alternatives very, very quickly”.
“That this is somehow going to be easy, or that it’s going to end, I think that’s a fantasy that we should put aside,” he added.
His comments come as Europe’s biggest economies brace for a harsh winter of rising inflation and the threat of recession as record rises in gas and electricity bills pile pressure on households and companies from all over the continent.
Russia, the main 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 dependent on Russian supplies, competition for scarce resources has pushed up wholesale European gas prices by a factor of 12 compared to a year ago.
Britain gets little of its gas directly from Russia, although it is exposed to rising prices in the wholesale market. Liz Truss, who is likely to be Britain’s next Prime Minister, has so far refused to explain what help she would give households as the price cap on energy bills rises by 80% to £3,549 a year from October.
Speaking on Monday, European Commission President Ursula von der Leyen said a package of emergency measures would soon be unveiled. Speaking in Slovenia as EU officials work on a plan, which could be announced this week, Von der Leyen said “emergency interventions” would be introduced in addition to long-term energy market reforms.
“Rising electricity prices are now exposing, for a variety of reasons, the limitations of our current electricity market design,” he said.
French Prime Minister Elizabeth Borne warned companies that power could be rationed this winter, while Belgium’s energy minister said the next five to 10 years could be difficult.
Speaking alongside the CEO of Shell in Norway, the head of another energy company, TotalEnergies’ Patrick Pouyanné, said European governments and policymakers should 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 companies, the Financial Times reported. “If you think without him [Russian gas], we will manage it. There is enough energy on this planet to do without it,” added Pouyanné.
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European gas prices have soared in recent weeks, reaching almost €350 (£299) per megawatt hour last week as countries rushed to build up supplies ahead of winter. Ukrainian President Volodymyr Zelenskiy on Monday accused Russia of “economic terror” by trying to cut gas supplies to Europe.
“He is pushing with the price crisis, with poverty, to weaken Europe,” he said.
Russian state company Gazprom is expected to carry out maintenance work on the Nord Stream 1 gas pipeline linking Russia and Germany across the Baltic Sea this week, complicating efforts to fill gas storage sites.
Wholesale gas prices fell on Monday after Germany’s economy minister said he expected the country’s storage to be 85% full next month. However, prices are still more than three times higher than at the beginning of the year.
Rising energy prices have helped oil and gas companies post windfall profits, prompting demands for windfall taxes to help fund emergency support for struggling households and businesses. Shell made record profits of almost £10bn between April and June and pledged to pay out £6.5bn worth of dividends to shareholders.