Europe should be prepared for Russia to totally cut all natural gas supplies this winter, IEA chief says

• Europe should be ready for Russia to completely shut off all its natural gas exports, the IEA chief said.
• "The nearer we are coming to winter, the more we understand Russia's intentions," he said.

Europe, should be prepared for the Russia to stop supplying the region completely this winter, the International Energy Agency told the Financial Times.

"The nearer we are coming to winter, the more we understand Russia's intentions," IEA head Faith Birol said. "Europe should be ready in case Russian gas is completely cut off," he added.

Russia wreaked havoc among several EU countries after it recently cut gas supplies over an equipment delay in Canada. Russian state giant Gazprom, for instance, terminated natural-gas supplies via the Nord Stream pipeline to Germany by 40% earlier this month.

Against this backdrop, benchmark European natural gas futures were trading Wednesday at their highest since March at around 130 euros per megawatt hour ($136), having almost doubled in the last 12 months.

Russia's decision has subsequently forced countries including Germany, Italy, and the Netherlands to draft emergency plans to shift to coal for power generation if natural gas supplies drop. To that effect, Germany and Austria have taken the decision to fire-up old coal power plants out of necessity.

"This is bitter, but it's essential in this situation to reduce gas consumption," Robert Habeck, economy minister and a senior member of the Green party, said in a recent statement.

Meanwhile, Denmark said natural gas would be rationed so that consumers could have winter heating.

Europe relies on Russia for 40% of its natural gas. Its leaders are preparing phase out imports of crude oil and coal this year, but have no such plans for gas imports.

Despite Russia citing logistical hold-ups as the reason for the drop in exports, Birol said there may be an ulterior motive at work in the run-up to the winter.

"I believe the cuts are geared towards avoiding Europe filling storage, and increasing Russia's leverage in the winter months," he said. He noted however that EU countries' move to lean on coal as a backup would be '"temporary" and it would work to preserve gas supplies in the winter months.

"I believe there will be more and deeper demand measures [taken by governments in Europe] as winter approaches," he said. That means European countries "should consider postponing closures [of nuclear power plants] as long as the safety conditions are there," Birol said. He also urged governments to invest in clean energy more to reduce fossil fuel demand.

"Unless governments sit in the driving seat and mobilize major funds to create a clean energy transition, we will have to deal with extreme volatility in energy," he said. Such a view was echoed by US Treasury Secretary Janet Yellen who recently called on lawmakers to go green as gasoline prices soar in the US.