Gas and coal crisis in Europe, Putin and Erdogan held a meeting in Sochi

  • By: Emir Tutic
  • Date: August 8, 2022
  • Time to read: 3 min.

Source: Sputnik/Vyacheslav Prokofyev/Pool via Reuters

Europe is currently facing the biggest energy crisis in the last few decades, and the consequences are the sanctions against Russia due to its aggression against Ukraine. Given that Russia was the largest importer of gas, coal, and oil in Europe, when the countries of the European Union decided to impose sanctions on Russia, there was general chaos in the market that led to price increases in gas, coal, and oil stocks. 

Although it produces a lot of pollution, and therefore the EU intended to reduce the use of coal, the war in Ukraine forced it to postpone the plans. Consumption of this energy is now on the rise as many countries, including Austria and the Netherlands, are now switching back to coal-fired power plants or increasing existing capacity to save gas, reports Politiko.

The problem is that the EU will soon be deprived of its largest supplier of coal, as the Union imposed sanctions on Russian coal, banning its import from August 10.

That means the 2 million tons of coal it is due to receive from Russia this month will be the last such shipment, said Alex Takra, senior coal analyst at market intelligence firm Argus Media, reports Politico.

Currently, the biggest shortage of coal is in Poland and Germany. The Polish government is already under scandal for failing to increase the country’s coal reserves. About 2 million households in Poland still rely on hard coal for heating, each burning an average of three tons per winter, says Robert Tomaszewski, senior energy analyst at Politika Insight.

Indonesia, South Africa, and Colombia are potential suppliers, but EU countries will face “extremely high prices” due to the type of coal used across the bloc. Coal prices at the API2 in Rotterdam hub last week reached $380 a ton, four times higher than this time last year.

The EU will face “fierce” competition from players such as India and South Korea, which have existing supply agreements with those countries, analyst Mark Nudgett said.

Europe is already facing the consequences of rising prices for gas and oil imports, and currently, only the Turkish Stream gas import represents the main point of supply.

Russian President Vladimir Putin called the Turkish Stream one of the most important arteries for supplying Europe with gas from Russia and said that partners in the region should be grateful to Ankara for that, RIA Novosti reports from Sochi.

“The Turkish Stream, unlike all other routes for supplying our hydrocarbons, works as it should, works rhythmically, without any breakdowns,” Putin said after a meeting with Turkish President Recep Tayyip Erdogan.

Meanwhile, Erdogan and Putin announced that the focus of their talks in Sochi will be negotiations on ending the war in Ukraine, an agreement on the export of Ukrainian grain, the situation in Syria, and the strengthening of economic ties between Moscow and Ankara.

Turkish President Recep Tayyip Erdogan said after returning from Sochi that Turkiye will pay for Russian gas in rubles.

Although it was quick to condemn the Russian offensive, Turkiye opted for neutrality and did not join Western sanctions against Moscow.

In 2021, Russia provided about a quarter of Turkiye’s imported oil and 45 percent of natural gas.

Putin thanked Erdogan for his help in negotiating the grain agreements, stating that, their importance to many countries around the world depends on Russian and Ukrainian exports.

Emir Tutić

Emir Tutic

Eastern Europe Reporter

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