UK gas supply: what could happen if Russia ends gas supplies to Europe - would energy bills go up in UK?

The Kremlin has cut off supplies to Poland, Bulgaria, Finland, Denmark and the Netherlands since Vladimir Putin ordered troops to invade Ukraine

The Russia-Ukraine war is now almost four months old, with Vladimir Putin’s troops beginning to make headway in the Donbas region.

As well as a devastating human toll, the conflict has fueled a major cost of living crisis - both in the UK and in Europe - because both Russia and Ukraine are major suppliers of energy, fuel and food.

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Energy, in particular, is a resource the Kremlin is using to harm Ukraine’s European allies, given much of the continent is heavily reliant on exports from Russia’s state energy companies.

The UK could face blackouts and energy rationing if Russia cuts gas supplies to Europe (image: AFP/Getty Images)

But what would happen in the UK if Russia opted to cut off gas exports to all of the major European economies?

How reliant is Europe and the UK on Russian gas?

Europe is a big customer for Russian gas.

According to the International Energy Agency (IEA), EU member states imported 155 billion cubic metres of natural gas from Russia in 2021.

This figure amounted to 45% of the bloc’s total gas imports for last year.

The war in Ukraine has seen Russia use gas as a ‘political and economic weapon’ according to Western leaders (image: AFP/Getty Images)

But it was also just under three-quarters of all the gas Russia exported that year.

Given the IEA estimates fuel and gas exports make up 45% of Russia’s federal budget, it shows Vladimir Putin has been somewhat reliant on Europe’s custom.

UK reliance on Russian gas is much lower, sitting at under 5% of its total natural gas imports.

However, the UK (like most countries) is exposed to global markets - so any supply shocks on mainland Europe would be felt here too.

Why is European gas supply in doubt?

Despite Europe having been Russia’s biggest customer over the last decade, the Kremlin has frequently used gas exports as “an economic and political weapon,” according to the IEA’s executive director Fatih Birol.

This situation has worsened in the wake of Russia’s invasion of Ukraine, as Vladimir Putin has retaliated against EU sanctions against Russia and the bloc’s financial and military support to President Volodymyr Zelensky’s country.

Vladimir Putin has demanded European countries pay for gas using Russian Rubles (image: AFP/Getty Images)

“Nobody is under any illusions anymore. Europe needs to act quickly to be ready to face considerable uncertainty over Russian gas supplies next winter,” Mr Birol said.

This uncertainty has been fueled by Russia lowering supplies to the EU in recent months.

In March, President Putin insisted European energy companies pay for Russian gas in Rubles or face being cut off from supply.

So far Russia has halted supplies to Poland, Bulgaria, Finland, Denmark and the Netherlands for not meeting this demand, while Italian energy firm Eni announced on Friday 17 June it had had half of its supply cut.

Several other European countries, including Germany, have had their supplies cut back.

The situation has forced Europe to look further afield for gas supplies - activity which has driven prices up across the globe.

Germany’s economics and climate protection minister Robert Habeck has revealed the country was moving a step closer to gas rationing (image: AFP/Getty Images)

And while the IEA says European dependence on Russian gas has now dropped to around 20%, some countries - Germany in particular - are still reliant on energy resources from the pariah state as they don’t have the infrastructure to import gas from elsewhere.

On Thursday (23 June) Germany, which gets 35% of its gas from Russia, moved a step closer to gas rationing after flows through the Nord Stream 1 pipeline were reduced to 40% of capacity - although Russia said this was due to equipment issues.

So, at present, it appears as if there could be trouble ahead on the continent when energy demand rises this winter.

Major EU economies, like Germany, are heavily reliant on Russian gas (image: AFP/Getty Images)

How could a Europe gas supply crisis affect the UK?

If Russia cut Europe off from its gas supplies, the UK could face widespread electricity shortages akin to those seen during the three-day week in December 1973.

A government worst-case scenario seen by newspaper The Times in May warned blackouts could begin in December and last for three months.

These outages would occur both on weekdays and weekends.

Under a slightly less bleak analysis, six million homes could face blackouts for more than a month at the beginning of 2023, as the government would be forced to ration energy at peak times.

These predictions come as there is a belief in Whitehall that Norwegian imports of gas, on which Britain is reliant, could be significantly reduced as a result of higher demand from the EU.

Meanwhile, imports of liquefied natural gas, which are imported into the UK by sea, could also be slashed as a result of the greater competition.

The UK already has a plan in the event of widespread blackouts.

Formerly known as ‘Black Start’ (because, NationalWorld has been told it would involve the burning of fuels like coal and oil that generate black smoke), but now known as ‘Restoration Services’, it would see back-up generators supply power to critical infrastructure until full power supplies can be restored.

The UK imports much of its natural gas by sea (image: Getty Images)

But such a scenario, where the UK loses all of its power, is deemed to be highly unlikely.

Looking at the overall picture, National Grid Electricity System Operator (ESO) - Britain’s electricity network operator - executive director Fintan Slye has said there will be “sufficient capacity” for this summer but said ESO is undertaking “additional analysis” on UK energy security for this winter.

The knock-on impact of any move by the Kremlin to stop EU gas exports would also depend on how severe the winter weather is, and therefore how high demand is.

We saw how disruptive a cold winter can be in the autumn and winter of 2021, when dozens of energy suppliers went bust.

Freezing temperatures in the winter of 2020, as well as reduced Russian gas supplies and high demand from economies recovering from Covid led to major wholesale price increases that smaller energy firms couldn’t cope with.

Conversely, if next winter is warm, the impact may not be as severe.

The UK could see energy rationing next winter if Russia cuts EU gas supplies (image: Getty Images)

Regardless of whether or not Kremlin gas supplies are cut off, what we already know is that energy is going to get much more expensive in the coming months.

The next Ofgem energy price cap - due to be revealed in August and implemented in October - could be £2,980, according to market analysts Cornwall Insight.

This would be a 51% increase on top of the 54% rise seen in April 2022.

Cornwall Insight has projected that the cap is likely to surpass £3,000 by January 2023.

“With the geopolitical events in Russia causing significant barriers to energy flows and the situation showing no sign of abating, we are unfortunately predicting average consumers will be facing a bill over 50% more than the existing cap – itself an unprecedented rise,” said Dr Craig Lowrey, principal consultant at the organisation.

“While the UK gets very little energy from Russia, ultimately the countries that do are seeking alternative sources of gas.

“This will impact the energy flows to the UK from continental Europe and cause further volatility in the market, adding fresh upward pressure to prices.”

So, even if the UK avoids electricity shortages, it looks set to be an expensive winter for households up and down the country.