Shell CEO: European Gas Pressures May Last Several Winters

© Reuters.

By Scott Kanowsky

AiVIF.com -- Europe may face several winters of gas shortages as the continent grapples with a slowdown in key supplies coming from Russia, according to Shell PLC (LON:SHEL) Chief Executive Officer Ben van Beurden.

Speaking at a news conference in Norway, van Beurden said that European leaders will have to find "solutions" to energy constraints over a "number of winters." He added that the discussions will likely test whether European Union member states can work together to maintain the health of key industries.

These possible solutions may include measures like rationing or the "very, very quick" development of sources of alternative energy, van Beurden said.

The warning from the head of Europe's largest oil and gas company comes as concerns remain over the ability of the Eurozone to weather the unscheduled maintenance of a major gas supply line out of Russia this week. Gazprom (MCX:GAZP), the Moscow-backed energy giant, is expected to stop flows of natural gas to Europe via the crucial Nord Stream 1 pipeline between August 31 and September 2.

EU governments have hit out at the Kremlin over the supply cuts, accusing Moscow of "weaponizing" crucial gas flows in a tit-for-tat response to Western sanctions instituted after the outbreak of the war in Ukraine.

The energy crisis is threatening to take a toll on the broader European economy. German power prices, widely viewed as the European benchmark, pushed above 1,000 euros for the time ever on Monday, while European wholesale gas prices touched a record peak last week.

In another sign of the increasing pressure, Fortum (HE:FORTUM) announced on Monday that it is in talks with the Finnish government - its biggest shareholder - over securing liquidity after the collateral it set aside to address high power prices surged by a billion euros to around €5B last week.

The utility also called on Nordic regulators to move quickly to shore up the energy market.

"A default of even a smaller market participant would be difficult to manage under the current extreme price levels and could cause severe disturbances to the Nordic power system," Fortum said in a statement.