Energy supply – Due to the Russian conflict, Swiss companies are threatened with closures

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As the conflict between Russia and Ukraine intensifies, the US government is considering contingency plans for gas supplies to Europe. A Russian delivery stop would also have far-reaching consequences for Swiss industrial sectors.

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Every fifth Swiss household is heated with gas: a Russian natural gas production facility 2500 kilometers north of Moscow. (archive image)

AFP/Natalia Kolesnikova

The US government is now examining contingency plans for gas deliveries to Europe.

The US government is now examining contingency plans for gas deliveries to Europe.

AFP/Natalia Kolesnikova

47 percent of gas deliveries to Switzerland come from Russia.

47 percent of gas deliveries to Switzerland come from Russia.

AFP/Natalia Kolesnikova

  • 47 percent of Switzerland’s gas imports come from Russia.

  • A Russian delivery stop would also have far-reaching consequences for Switzerland.

  • Some industrial companies would even have to close.

In December 2021, natural gas prices in Europe rose by over 400 percent. Some energy suppliers in Germany and Belgium stopped their deliveries or even went bankrupt because of the gas price explosion. The situation was also precarious due to the historically low filling levels in the gas storage facilities. After prices fell temporarily due to a delivery of US tankers loaded with liquefied natural gas (LNG), the nervousness among dealers is increasing again. The reason for this: dhe tensions between Russia and Ukraine (see box).

Russia has massed more than 100,000 soldiers on the border with Ukraine. While the West fears an invasion, the Russian government denies such plans. Since October, however, the Russian monopolist Gazprom has been exporting significantly less gas than in previous years. In the first weeks of January it is only 1.74 billion cubic meters – almost half as much as a year ago. And exports are to be curbed even further, like them Reuters news agency made public on Monday.

Now the US government is examining energy companies Contingency plans for gas supplies to Europe. US State Department officials have spoken to the companies about capacity for higher delivery volumes if Russian gas supplies are disrupted.

According to the Association of the Swiss Gas Industry (Gazenergie). 47 percent of gas imports Switzerland from Russia. In around every fifth household is heated with natural gas, and various branches of industry are on natural gas imports dependent. Should the monopolist Gazprom throttle or even stop natural gas exports to the West in the event of a military conflict, the effects would be felt as far away as Switzerland. That says Daniel Germann, Senior Gas Trader at the energy service provider Ompex.

“In extreme cases, the market collapses”

“A prolonged failure of Russian gas supplies would have far-reaching consequences for the entire energy market,” says Germann. Switzerland obtains most of its gas from trading centers in Germany or din Netherlandsn – in the event of a crisis, Switzerland is dependent on the EU.

Compensation through additional deliveries from other markets, such as the import of additional liquid gas from the USA, is only possible to a limited extent. “Initially, the failure would lead to a sharp increase in energy prices, but if it lasts longer, in extreme cases there may be a market failure, with measures ordered by the authorities being necessary.”

Conversion to heating oil

In purely mathematical terms, the current storage levels of European gas storage facilities and other imports and in-house production could be sufficient to get through a normal winter without Russian deliveries, says Georg Zachmann, an energy expert at the Bruegel think tank in Brussels. “But that is very tight and only works if countries with better access to gas are willing to share with others.”

In the event of a Russian supply interruption, Switzerland would have to, like the whole of Europe, expect gas consumption restrictions, agrees Fabien Lüthi from the Federal Office of Energy (SFOE). “The extent would depend on the duration of the interruption.” According to Lüthi, one advantage of Switzerland is the relatively high proportion of dual-fuel industrial plants that could switch from gas to oil if necessary.

However, according to the Federal Office for National Economic Supply, the number of dual-fuel systems in Switzerland has been falling sharply for years. The example of Stahl Gerlafingen AG shows that not all companies could simply switch to oil. «Around ago 30 years ago was switched to natural gas. Without natural gas supply, the production companies would have to stop operations, »says a spokeswoman (see box).

The steel and aluminum industry would be particularly affected by a Russian delivery stop, says Stefan Brupbacher, director of the Swiss Association of Mechanical, Electrical and Metal Industries (Swissmem). “This is characterized by high-temperature processes and natural gas is still indispensable as a fossil fuel.” Should Russia limit or even stop exports to Europe, the financial consequences would be “immense”, according to Brupbacher. In order to remain competitive, it is therefore essential that Swiss gas consumers are not discriminated against compared to their EU competitors when importing gas.

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