WEBVTT - IEA Head Fatih Birol Talks EU’s Russia Gas Phase-Out

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Let's bring you more

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<v Speaker 1>now though, on that EU deal to phase out Russian gas.

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<v Speaker 1>The agreement reached in the early hours of this morning.

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<v Speaker 1>We'll see you're a bend purchases of LNG and pipeline

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<v Speaker 1>gas by September twenty twenty seven. Joining us in our

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<v Speaker 1>Brussels studio to discuss the head of the International Energy Agency,

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<v Speaker 1>Patti Berrel, Good morning, Great to see you in the studio.

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<v Speaker 1>This has been a long road for the European Union.

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<v Speaker 1>The war is three and a half years longer. Now,

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<v Speaker 1>how significant is this moment? Is this deal?

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<v Speaker 2>I think? I think it is a historical deal for

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<v Speaker 2>Europe because Russia has been the number one energy supplier

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<v Speaker 2>of Europe over half a century since nineteen seventies, and

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<v Speaker 2>natural gas was the most important fuel here. Until recently,

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<v Speaker 2>about half of the natural gas consumption in Europe came

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<v Speaker 2>from Russia. So after the Russia's invasion of Ukraine and

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<v Speaker 2>Russia using nature gas as a weapon, Europe took this

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<v Speaker 2>decision European countries. It is historical and online and of

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<v Speaker 2>course I congrege you to European countries. But on the

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<v Speaker 2>other hand, the market context we are in is also

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<v Speaker 2>helping Europe creating a room of maneuver, such as huge

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<v Speaker 2>amount of LNG looking for nature gas coming to markets

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<v Speaker 2>starting from twenty twenty six through two thirty, so there'll

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<v Speaker 2>be a lot of alternatives to Russian gas for European countries.

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<v Speaker 1>Is there a risk that the European countries simply replicates

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<v Speaker 1>the situation they had of an over alliance on a

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<v Speaker 1>single supplier by turning to other countries. You know, we

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<v Speaker 1>know that the United States has also talked about wanting

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<v Speaker 1>Europe to buy a lot more LANG from them.

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<v Speaker 2>In fact, when we look at the history, the story

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<v Speaker 2>with the Russian gas dependencies started in nineteen seventies when

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<v Speaker 2>Europe wanted to diversify from Middle East oil went to

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<v Speaker 2>another supplier to Russia. And I very much hope that

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<v Speaker 2>Europe now learned this lesson that doesn't repeat the same

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<v Speaker 2>mistake and create diversification for its energy imports. For me,

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<v Speaker 2>the number one golden rule of energy securities diversify as

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<v Speaker 2>much as possible. There are a lot of countries providing

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<v Speaker 2>gas to the markets. Markets will turn from years and

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<v Speaker 2>years being a market of sellers to the markets of buyers,

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<v Speaker 2>so it's abect the Europeans and stronger, and of course

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<v Speaker 2>US is a very important ally. Europe will continue to

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<v Speaker 2>import US LNG, but there will be also other opportunities

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<v Speaker 2>for europe queity.

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<v Speaker 1>Russian supplies go now then with this deal to phase

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<v Speaker 1>out the European purchasers.

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<v Speaker 2>This is a key question for Russians and they first

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<v Speaker 2>of all, they will lose a lot of money, loss

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<v Speaker 2>of revenues. And it is not easy for gas, unlike oil,

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<v Speaker 2>to go from one destination to another, because the big

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<v Speaker 2>chunk of the Russian gas came to Europe through pipeline

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<v Speaker 2>which will built years and years. And now Russia is

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<v Speaker 2>trying to increase exports to China, which is in fact

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<v Speaker 2>difficult undertaking for several reasons.

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<v Speaker 1>The U Energy Commissioner also saying this morning that a

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<v Speaker 1>proposal to ban imports of all Russian oil is going

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<v Speaker 1>to be table at the beginning of next year as well.

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<v Speaker 1>They're meant to have that on by the end of

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<v Speaker 1>twenty twenty seven too. How important would that be in

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<v Speaker 1>this move away from Russian supplies.

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<v Speaker 2>I think when we see the Russian energy imports back

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<v Speaker 2>of it, as we discussed as natural gas, there is oil,

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<v Speaker 2>and there is also uranium supply, nuclear supplass coming from Russia.

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<v Speaker 2>I think to bend oil from Russia is also very

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<v Speaker 2>timely from a political perspective. But in addition to that,

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<v Speaker 2>there is a huge amount of oil in the market.

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<v Speaker 2>There's a surplus of oil oil production, so it wouldn't

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<v Speaker 2>have a major impact nd the oil prices if it

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<v Speaker 2>is done in a gradual and in a careful way,

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<v Speaker 2>so it wouldn't lead the price spikes as many of

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<v Speaker 2>us might be scared of. So I think it will

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<v Speaker 2>be timely. If Europe goes that way, it will in

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<v Speaker 2>turn have Europe to radius Russian energy export revenues.

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<v Speaker 1>I'm wondering as well, because of course all of this

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<v Speaker 1>is happening because of the ongoing war in Ukraine. How

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<v Speaker 1>are you viewing the risks for Ukraine's energy system in

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<v Speaker 1>this winter as Russia has been continuing attacks on their

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<v Speaker 1>energy infrastructure, as Ukraine has on Russian energy infrastructure.

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<v Speaker 2>We have been following the Ukraine energistration, especially when it

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<v Speaker 2>comes to winter, and I would say that this is

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<v Speaker 2>perhaps the most difficult winter of European battle Ukraine energy

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<v Speaker 2>sector because it is all the very very vulnerable and

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<v Speaker 2>we have seen the especially the electricity infrastructure and heating

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<v Speaker 2>infrastructures under huge strain, and this would be the most

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<v Speaker 2>challenging winter Ukraine has faced since the start of the wall.

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<v Speaker 1>Do you see the situation getting much worse as the ructures.

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<v Speaker 2>Exactly, it can't get much worse than we have seen

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<v Speaker 2>in the last three years. But of course Ukraine allies

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<v Speaker 2>are ready hopefully to support Ukraine, especially in terms of

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<v Speaker 2>the electricity infrastructure.

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<v Speaker 1>From the EU point of view, this was framed by

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<v Speaker 1>the EU commissioned President ar Slavander line as part of

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<v Speaker 1>the ramp up of renewable energy. Surprise in Europe too.

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<v Speaker 1>I'm wondering, given the market dynamics that you've described, there's

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<v Speaker 1>low prices for gas as well, is this going to

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<v Speaker 1>take I suppose some of the inputus out of the

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<v Speaker 1>EU to further that shift into renewables.

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<v Speaker 2>It somewhat, but I think the denewments are growing so

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<v Speaker 2>strongly in Europe. Just in the last three years after

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<v Speaker 2>the after the we have seen the major energy crisis

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<v Speaker 2>in Europe, renewables increase forty person. We have never seen

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<v Speaker 2>any country, including Europe the European region, such a big increase,

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<v Speaker 2>plus many European countries change their position. As I has

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<v Speaker 2>suggested on nuclear power, there's a comeback of nuclear and

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<v Speaker 2>with the cheaper nature gas, Europe will find a better mix,

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<v Speaker 2>much more balanced mixed now good for the energy security

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<v Speaker 2>and with the lower nature gas process good for the

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<v Speaker 2>competitieness of Europe.

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<v Speaker 1>But of course there's questions too about the grade adapting

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<v Speaker 1>to this too. Of course, we have the blackout in Spain,

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<v Speaker 1>a very dramatic moment for European energy supplies. How much

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<v Speaker 1>of a risk are issues like that as the energy

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<v Speaker 1>mix continues to change.

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<v Speaker 2>I think the electricy security discs are there, and the

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<v Speaker 2>nerve center of all the electricity discussions here is the greats.

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<v Speaker 2>We don't have enough smart and modern greeds. The issue

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<v Speaker 2>has been too much concentrated and building power plants and

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<v Speaker 2>we are okay with that, but we don't have enough

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<v Speaker 2>greeds to bring these electricity in the power plans to

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<v Speaker 2>the household, to the factories. It is the next big

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<v Speaker 2>job for European Commission.

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<v Speaker 1>Do we need to be concerned about more black eyes

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<v Speaker 1>like what we saw in Spain?

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<v Speaker 2>Yes, we should, especially when the demand goes up strongly

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<v Speaker 2>which means extreme weather events very cold or very hot summer.

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<v Speaker 2>This may create a big strengths and the existing greeds.

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<v Speaker 2>So the first job the next chapter for European Commission

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<v Speaker 2>should be strengthening building new grets in order to address

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<v Speaker 2>these electricity security challenges.

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<v Speaker 1>Okay, Passy Perrel they had at the International Energy Agency.

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<v Speaker 1>Thank you very much for joining us our Brussels studio

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<v Speaker 1>this morning.