Bloomberg Audio Studios, podcasts, radio news. Let's bring you more now though, on that EU deal to phase out Russian gas. The agreement reached in the early hours of this morning. We'll see you're a bend purchases of LNG and pipeline gas by September twenty twenty seven. Joining us in our Brussels studio to discuss the head of the International Energy Agency, Patti Berrel, Good morning, Great to see you in the studio. This has been a long road for the European Union.
The war is three and a half years longer. Now, how significant is this moment? Is this deal?
I think? I think it is a historical deal for Europe because Russia has been the number one energy supplier of Europe over half a century since nineteen seventies, and natural gas was the most important fuel here. Until recently, about half of the natural gas consumption in Europe came from Russia. So after the Russia's invasion of Ukraine and Russia using nature gas as a weapon, Europe took this decision European countries. It is historical and online and of
course I congrege you to European countries. But on the other hand, the market context we are in is also helping Europe creating a room of maneuver, such as huge amount of LNG looking for nature gas coming to markets starting from twenty twenty six through two thirty, so there'll be a lot of alternatives to Russian gas for European countries.
Is there a risk that the European countries simply replicates the situation they had of an over alliance on a single supplier by turning to other countries. You know, we know that the United States has also talked about wanting Europe to buy a lot more LANG from them.
In fact, when we look at the history, the story with the Russian gas dependencies started in nineteen seventies when Europe wanted to diversify from Middle East oil went to another supplier to Russia. And I very much hope that Europe now learned this lesson that doesn't repeat the same mistake and create diversification for its energy imports. For me, the number one golden rule of energy securities diversify as much as possible. There are a lot of countries providing
gas to the markets. Markets will turn from years and years being a market of sellers to the markets of buyers, so it's abect the Europeans and stronger, and of course US is a very important ally. Europe will continue to import US LNG, but there will be also other opportunities for europe queity.
Russian supplies go now then with this deal to phase out the European purchasers.
This is a key question for Russians and they first of all, they will lose a lot of money, loss of revenues. And it is not easy for gas, unlike oil, to go from one destination to another, because the big chunk of the Russian gas came to Europe through pipeline which will built years and years. And now Russia is trying to increase exports to China, which is in fact difficult undertaking for several reasons.
The U Energy Commissioner also saying this morning that a proposal to ban imports of all Russian oil is going to be table at the beginning of next year as well. They're meant to have that on by the end of twenty twenty seven too. How important would that be in this move away from Russian supplies.
I think when we see the Russian energy imports back of it, as we discussed as natural gas, there is oil, and there is also uranium supply, nuclear supplass coming from Russia. I think to bend oil from Russia is also very timely from a political perspective. But in addition to that, there is a huge amount of oil in the market.
There's a surplus of oil oil production, so it wouldn't have a major impact nd the oil prices if it is done in a gradual and in a careful way, so it wouldn't lead the price spikes as many of us might be scared of. So I think it will be timely. If Europe goes that way, it will in turn have Europe to radius Russian energy export revenues.
I'm wondering as well, because of course all of this is happening because of the ongoing war in Ukraine. How are you viewing the risks for Ukraine's energy system in this winter as Russia has been continuing attacks on their energy infrastructure, as Ukraine has on Russian energy infrastructure.
We have been following the Ukraine energistration, especially when it comes to winter, and I would say that this is perhaps the most difficult winter of European battle Ukraine energy sector because it is all the very very vulnerable and we have seen the especially the electricity infrastructure and heating infrastructures under huge strain, and this would be the most challenging winter Ukraine has faced since the start of the wall.
Do you see the situation getting much worse as the ructures.
Exactly, it can't get much worse than we have seen in the last three years. But of course Ukraine allies are ready hopefully to support Ukraine, especially in terms of the electricity infrastructure.
From the EU point of view, this was framed by the EU commissioned President ar Slavander line as part of the ramp up of renewable energy. Surprise in Europe too. I'm wondering, given the market dynamics that you've described, there's low prices for gas as well, is this going to take I suppose some of the inputus out of the EU to further that shift into renewables.
It somewhat, but I think the denewments are growing so strongly in Europe. Just in the last three years after the after the we have seen the major energy crisis in Europe, renewables increase forty person. We have never seen any country, including Europe the European region, such a big increase,
plus many European countries change their position. As I has suggested on nuclear power, there's a comeback of nuclear and with the cheaper nature gas, Europe will find a better mix, much more balanced mixed now good for the energy security and with the lower nature gas process good for the competitieness of Europe.
But of course there's questions too about the grade adapting to this too. Of course, we have the blackout in Spain, a very dramatic moment for European energy supplies. How much of a risk are issues like that as the energy mix continues to change.
I think the electricy security discs are there, and the nerve center of all the electricity discussions here is the greats. We don't have enough smart and modern greeds. The issue has been too much concentrated and building power plants and we are okay with that, but we don't have enough greeds to bring these electricity in the power plans to the household, to the factories. It is the next big job for European Commission.
Do we need to be concerned about more black eyes like what we saw in Spain?
Yes, we should, especially when the demand goes up strongly which means extreme weather events very cold or very hot summer. This may create a big strengths and the existing greeds. So the first job the next chapter for European Commission should be strengthening building new grets in order to address these electricity security challenges.
Okay, Passy Perrel they had at the International Energy Agency. Thank you very much for joining us our Brussels studio this morning.