Shell CEO Ben van Beurden has warned that Europe may need to rationize access to energy this winter, as it predicted “significantly” higher prices if Russia continues to drown gas supplies to the EU.
The head of Europe’s largest oil and gas company said Russian President Vladimir Putin had shown that he was “capable and willing to arm the energy supply” and that a total suspension of exports could not be ruled out of Russian gas in Europe.
“I think we are going to face a very tough winter in Europe,” van Beurden said on Thursday at an energy conference in Oxford.
“Maybe some countries will do better than others, but I think we will all face a very significant price escalation, so there will be a lot of pressure on the industry and therefore a lot of pressure on the economy,” he said. add. “In the worst case, we will find ourselves in a situation where we have to ration.”
Russia’s main pipeline to Germany was disconnected for scheduled maintenance on Monday, prompting fears that gas flow would not resume once repairs were completed.
Putin threatened last week with “catastrophic consequences” for world energy markets if Western powers imposed more sanctions on Moscow for Russia’s invasion of Ukraine.
Other senior energy industry officials, including Fatih Birol, head of the International Energy Agency, have also warned Europe to prepare for the possibility of a complete shutdown of gas supplies from Russia this winter.
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Birol told the Financial Times last month that measures already taken by European countries to reduce gas demand, such as the switching on of old coal-fired power plants, were justified by the scale of the crisis despite concerns about increase in carbon emissions. European countries should also try to keep open nuclear power plants open and look for other ways to reduce demand, he added.
Van Beurden said on Thursday that these measures, specifically the renewed dependence on coal, meant that Europe should “step back” in its energy transition plans, at least initially.
“We’ll take a few steps back before we can take a few steps forward,” he said.
But he added that the aftermath of the Russian invasion of Ukraine had been a wake-up call to policymakers that would ultimately help speed up Europe’s energy transition to reduce dependence on imported fuels.
“We had enough ambition, but this time I think we will have enough conviction,” he said.