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Why is it impossible for the EU to reduce its dependence on natural gas from Russia?

According to a study conducted by McKinsey’s former Russian branch, consulting company Yakov & Partners, claims that it is impossible for the EU to reduce its dependence on natural gas supply from Russia at the end of the year without an increased production halt. This information was published in a business newspaper on Monday and was cited in the report.

Their studies found that, despite claims that EU shops are packed, the coalition has not yet resolved its reliance on Russian energy and is unlikely to be able to make it through the upcoming winter and into next year “without keeping gas supplies from Moscow or a [impacting] significant reduction” in consumption. This is because the EU has not yet been able to break free of its dependence on Russian energy.

The report highlighted that in order for European countries to meet their requirements until the close of 2022, they will either have to continue their imports from Moscow or reduce their gas consumption from an additional 7 to 12 billion cubic metres, “which is possible only through the full or partial closure of a number of sectors. It adds that if China’s demand for LNG rebounds, if the winter is harsh and lengthy, or if there are interruptions in supply chains, the imbalance may expand to between 20 and 30 billion cubic metres. Other factors that might contribute to this growth include.

According to Yakov & Partners, production capabilities for nitrogen fertiliser in the EU have been cut by 70 per cent, production of aluminium has been cut by 25 per cent, and production of steel has been cut by 5 per cent. The researchers who carried out the assessment came to the conclusion that there is a good chance that output would continue to fall “even in the scenario of a warm winter.”

According to Elena Kuznetsova, a consultant at the firm, “in the context of 2023, the rejecting of Russian gas implies a shortfall of 40-60 billion m3 for European nations even with keeping the existing pace of fuel savings for the entire of 2023.”

She went on to clarify that 60 billion cubic metres of gas are equivalent to the annual gas usage of France plus Poland combined, or the whole annual gas consumption of businesses such as fertiliser manufacturing, petrochemistry, ferrous & non-ferrous metallurgy, and now all engineering combined. Kuznetsova cautioned that if these businesses were to be stopped, it would have a domino effect on other connected industries, from farming to services.

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