Europe Asked Russia for More Coal But Has to Get in Line

Europe, which is experiencing a shortage of natural gas, asked Russia for more coal, Bloomberg reports. According to the experts, electricity producers are forced to do this to ease the energy crisis before the winter, even though in recent years, the EU has been abandoning coal in order to make electricity production environmentally friendly.  

The price of gas in Europe set a record, reaching the level of $ 1,098 per thousand cubic metres on September 30. The growth compared to the closing level of the previous trading session was 2.9 per cent.

As specified, in the first half of the year, Russian coal exports increased by 2.4 per cent (to 22.5 million tonnes). The country’s Ministry of Energy believes that the volume of supplies, including for the production of electricity to Europe, will not change this year and will be about 48 million tonnes.

“If all the European utilities switch to coal, it will result in a huge spike in coal demand that Russia alone cannot provide for on such a short notice,” stated the chief analyst of Wood Mackenzie Ltd. Natasha Tyurina.

It's become tougher to make money from gas power than from coal in Europe
Picture: Bloomberg

Europe’s situation highlights the energy supply crisis that has started to grasp the world as soon as the countries have begun to develop after the pandemic. Demand for oil, gas and electricity is surging, while coal is making a comeback. And when European utilities are in desperate need to get their hands on more coal, Russia, which is the world’s third-biggest exporter of it, is mainly targeting sales to the Asian buyers.

Picture: Bloomberg

“Russia has been cutting coal exports to Europe for years as the EU was closing thermal coal power stations. It’ll be hard to re-route to Europe,” head of research at BCS Global Markets, Kirill Chuyko, noted.

It is noted that the situation is complicated by Europe’s harsh environmental standards for burning coal, which make it really difficult and time-consuming for Russia to prepare supplies that meet the quality requirements. According to Kirill Nikoda, the deputy head of the centre for economic forecasting a Gazprombank, the infrastructure can handle about 133 million tonnes of coal toward the west this year, which is almost 40 million tonnes higher than capacity in 2020.

Picture: Bloomberg

Still, coal exports to Europe are expected to be flat this year at about 48 million tonnes, as stated by the spokeswoman for the Russian Ministry of Energy. Rising demand from Europe could potentially lure more Russian coal, “but the question is how much additional supply rail infrastructure would allow”.

Ru-Main, 04.10.2021



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