The global energy crisis sparked by Russia’s unprovoked invasion of Ukraine was near the top of the agenda this week as high-ranking officials and corporate titans met at the World Economic Forum in Davos, Switzerland.

During a panel discussion on Tuesday, the head of the International Energy Agency (IEA), Fatih Birol, called this “the first global energy crisis.” Unlike the 1970s, this crisis involves not only oil but also natural gas and coal, Birol said.

“As a result, we are seeing that the global energy markets are in major turmoil,” he said. Prices “are putting a burden” on economies and leading to recession in some countries. He also told reporters that some European nations could face natural gas rationing next winter.

[Shale Daily: Including impactful news and transparent pricing for shale and unconventional plays across the U.S. and Canada, Shale Daily offers a clear snapshot of natural gas supplies for analysts, investors and global LNG buyers. Learn more.]

However, Birol said, it is imperative that responses “do not lock in our energy future.” Some measures are definitely right, but “some go beyond.”

Vice President Frans Timmermans of the European Commission (EC) said there “is a Europe before the 24th of February and one after.” He was referring to the start of the war in Ukraine. In the “new” Europe, “we can no longer depend on Russian fossil fuels.”

Before the war, Russia was the world’s No. 1 exporter of both crude oil and natural gas. Russia also supplied Europe with around 40% of its natural gas needs.

Timmermans said the new European plan to displace these fuels relies on energy savings, the transition to renewable energies, and a diversification of the sourcing of energy. As part of this, he said Europe is looking to sign liquefied natural gas (LNG) and pipeline contracts around the world. 

Diversifying Supply

Engie SA CEO Catherine MacGregor said diversification was a key solution to the crisis. “We are making sure we are buying the gas that is needed from a range of suppliers…The future energy mix has to be balanced.”

She added that “it’s common sense to not put all your eggs in one basket” and “gas will play a strong role in the energy transition.”

U.S. Special Presidential Envoy for Climate John Kerry said the war in Ukraine has “challenged peoples’ thinking to some degree.” Still, he said, “we should not allow a false narrative to be created that what has happened in Ukraine somehow obviates” the need to address climate change.

Natural gas in the current crisis should come from Lower 48 unconventional resources because they are “quick to market,” Kerry said. Producers should also channel natural gas that is wasted through venting and flaring. He warned against “a massive buildout” of new infrastructure. “We have to be more creative than that.”

EC President Ursula von der Leyen said Europe needs to diversify its gas supplies. “As we speak, Europe is concluding new agreements with reliable, trustworthy suppliers all over the world.”

Europe and the United States have already agreed to additional LNG deliveries

“More LNG and pipeline gas will also come from the Middle East and North Africa,” von der Leyen said. “New LNG terminals in Greece, Cyprus and Poland will soon become operational, as will new interconnectors. And the connecting pipeline infrastructure will form the core of our future hydrogen corridors.”

Europe “must also think further ahead,” she told the audience. The economies of the future need lithium for batteries, silicon metal for chips, and rare earth elements for electric vehicles and wind turbines.

“For many of them, we rely on a handful of producers in the world,” von der Leyen said. “So, we must avoid falling into the same trap as with oil and gas. We should not replace old dependencies with new ones. We are therefore working to ensure the resilience of our supply chains. And again, strong international partnerships are at the heart of the solution.”