A black autumn is coming”. The phrase was released to me point-blank by an IBEX director from the energy sector and was confirmed on Wednesday by the president of the European Commission, Úrsula von der Leyen, who acknowledged that Russia is preparing to cut off gas to Germany in the coming weeks. The excuse may be the maintenance works, which this Monday will begin on or near the November elections to renew the mandate of Putin himself.
Western intelligence services have long held that the supply disruption would occur in the fall-winter of this year. Now, in addition, they consider that Putin can use it as an asset so that the United States and its allies recognize their sovereignty over the Donbas region and the Crimean peninsula, invaded in 2014. The troops commanded by the Kremlin took the city of Lugansk and in a few months they are expected to conquer Donetsk and thus complete their rule over all of eastern Ukraine.
Putin has everything ready to hit the table to reaffirm his absolute leadership. At NATO headquarters in Brussels, as well as in Paris and Frankfurt, the question is no longer whether it will cut off gas to Europe, but how long the interruption will last. Europe only has to endure a few months. Gas reserves are around 60% and a large part of the German or Italian industry will be paralyzed without an energy alternative. Europe is on the precipice.
“If Russia suspends supplies, we face an unknown scenario,” acknowledge media close to the Bank of Spain. There will be a new shot of inflation. How much can you climb? The answer does not exist, no one dares at this time to put a number on consumer prices that are already in double digits.
The forecasts have become outdated only in a few weeks. The 1.5% drop in growth predicted by the Bank of Spain in May if the flow of Russian gas stops falls short. “Europe will go unreservedly into recession,” that is the forecast shared by many analysis houses.
Brent-type oil dances above one hundred dollars, with a fall of 30% above maximums for fear of a crisis. as a result of an inflationary spiral, as happened in the 1970s, when it reached 140 dollars per barrel and then plummeted to 40.
And Spain? According to the first vice president, Nadia Calviño, in Congress, our country will endure better than the others and will avoid recession. But you know that words are carried by the wind. She also said that inflation would be temporary and that European funds would be distributed in a flash and have only reached a few public bodies.
The vice president was referring to a scenario in which Russian gas continues to flow to the Old Continent, albeit with difficulties. Everything indicates that Spain will not be an exception. It will suffer the same fate as the rest of Europe or worse, because in the event that Moscow turns off the tap, the economy will suffer a new shock when it has not yet recovered from Covid.
Let no one think that if Europe goes out, Spain is going to be an exception. “Prices will become more expensive and we will have difficulties to maintain supplies, simply because there will not be enough gas for everyone,” they point out in the sector’s media.
Imports of the appreciated Russian hydrocarbon only reached 12% before the war, but the conflict with Algeria has forced purchases by ship from the United States to 35%, which is already our main supplier.
Washington has tripled its exports to Europe so far this year, diverting the flows it used to send to Asia, especially China and India, and it has the potential to produce more, just like Norway, Qatar, Nigeria or Australia. The problem is that the methane tanker fleet, around 720 in the world, is already operating at full capacity.
of the Prime Minister, Pedro Sánchez, and the Foreign Minister, José Manuel Albares, complicates everything. “We are going to pay dearly for it,” experts warn.
The president of Naturgy, Francisco Reynés, acknowledged in an interview published this week by elEconomista that in the renegotiation of the contract for the next decade, as a consequence of geopolitical tensions.
Spain was left without more than half of the Algerian gas supply that we received through the Moroccan gas pipeline, through which we imported up to 12,000 million cubic meters (bcm). The Medgaz, the only one left in operation, only has a capacity of 9 bcm and is not full.
If both pipes were open, our country would not have any problem with gas, they corroborate in the sector.
A domino effect is feared. The flame of gas will set consumer prices on fire and then catch up with interest rates. The European Central Bank (ECB) wants to advance to the next day 21 the protection shield for the most vulnerable countries, such as Spain and Italy, to prevent the rise in money from unleashing a storm on the risk premiums of the countries of the South.
Calviño estimated only 15% of the debt affected this year by the rise in interest rates, thanks to the fact that the Treasury took advantage of the time of fat cows, in which it charged for bonds, to multiply the issues with long-term maturity. That is why we enjoy relative tranquility.
. With a debt at 140% and elections in April, the departure of former President Mario Draghi as Prime Minister creates concern and uncertainty at the same time. I don’t know which coalition can govern in the next legislature or if it will respect economic orthodoxy.
Italy would be one of the countries most affected by a hypothetical supply cut, since its dependence on Soviet gas reached 80% a few months ago. With these characteristics, it has all the ballots to once again become the center of the bullseye that speculators shoot at with risk premiums, until it causes another perfect storm in the euro. Not only the fall, but also the spring of 2023 is hot and full of uncertainties. Only an armistice with Russia in the coming months would calm prices.
PS.-Another blow to the industry! Abengoa, one of the giants of renewables, is reeling after SEPI denied its aid plan and the Treasury has seized all its accounts.
The president, Clemente Fernández, presented ‘in extremis’ an offer linked to the RCP and Sinclair funds, of unknown origin, which offers 200 million in exchange for a reduction of 97% of the debt. Another patch reminiscent of the failure he already had with the Earthsea proposal.
The Andalusian Government of Juan Manuel Moreno Bonilla, in collaboration with the Minister of Industry, Reyes Maroto, is working to sell healthy subsidiaries to companies such as Técnicas Reunidas or Lantania. Also, there is a rumor that a Saudi fund could acquire the area specialized in desalination, to extend its presence to the Middle East.
The decision of the Minister of Finance, María Jesús Montero, (who also controls SEPI) to seize all the accounts at such a delicate moment was like a stab in the back of the Andalusian administration, which hints at the crooked intentions of the former director region of.
In the event that these initiatives do not go ahead, it is better to drop the company, even if it is involved in the second largest bankruptcy in Spanish history after Fadesa, than to bring in a partner with dubious credentials. One only has to look back to find multiple examples in which the remedy was worse than the disease.
Perhaps the closest is the sale of Alcoa’s industrial assets in Avilés to an unknown group, without specialization in the sector, which ended up scrapping the company after collecting the compensation agreed with the administrations.
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