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Ukraine invasion: How reliant is Switzerland on Russia for energy?

The Local
The Local - [email protected] • 1 Apr, 2022 Updated Fri 1 Apr 2022 13:45 CEST
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Warm steam rises from a chimney on a house in the Swiss canton of St Gallen. Photo by Nadine Marfurt on Unsplash

Russia’s invasion of Ukraine is set to have widespread repercussions throughout Europe and the world. What will it mean for energy supplies in Switzerland?

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On Monday, February 28th, Russia’s invasion of Ukraine continued, with the Russian military laying siege to several of Ukraine’s largest cities. 

From a Swiss perspective, one of the major impacts is likely to be on energy prices.

Like many European countries, Switzerland imports Russian natural gas and oil for energy production, while the indirect impact of warfare on global markets is also likely to be felt in Switzerland. 

What does the conflict mean for oil prices? 

Russia is a major producer of oil and gas, much of which is consumed here, although the direct impact of the conflict is unlikely to be significant for Switzerland, at least in the short term. 

While the impact of direct imports may be minimal, the pinch however may be felt as part of a broader global spike in oil prices. 

Around a quarter of Switzerland’s petroleum needs come from the Swiss refinery in Cressier. Russia supplies relatively little crude oil for this plant, with the majority coming from the United States, Nigeria and Libya. 

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The remainder of Switzerland’s petrol imports, around 75 percent, is already refined, with the majority of that coming from France and Germany.

Swiss news outlet Watson reports that it is difficult to determine exactly how much of the refined petrol originally comes from Russia, although approximately 25 percent of the European Union’s crude imports are of Russian origin. 

Daniel Hofer, president of Avenergy (formerly Petroleum Union), said motorists may pay more than CHF2 per litre at the pump as a result of a global climb in oil prices. 

“A further rise in the crude price is likely if the situation continues to worsen,” according to Daniel Hofer, president of Avenergy (formerly Petroleum Union).

If payment traffic is interrupted, there is also a risk of gas deliveries from Russia stopping, and oil will automatically become more expensive.

 “We are going to have petrol prices above 2 francs and they will probably stay at this level for some time yet”, Hofer said.

READ MORE: Where in Switzerland can you find the cheapest fuel?

What about gas?

While the reliance on Russian oil is comparatively minimal, Switzerland has a heavier reliance on Russian gas. 

Natural gas provides around an eighth of Switzerland's total energy supply.

Problematically, Switzerland does not have any capacity to store gas in order to prevent insecurity of supply. This is despite a federally mandated store of a variety of other things, including foodstuffs and medication. 

Coffee, opiates and nuclear fuel: What are Switzerland’s ‘strategic stockpiles’?

Switzerland buys most of its gas through various European distribution centres, although an estimated 47 percent of this is of Russian origin. 

Although this appears to be a potential vulnerability, experts are not convinced the conflict will see Russia turn off the tap. 

Grünwald is convinced that “Russia will continue to honour its delivery contracts”, regardless of how the conflict plays out.

As a last resort, Switzerland would be able to buy petrol from other countries, especially the United States, while Switzerland could also increase its import of Norwegian and EU natural gas, which is currently at 24 percent and 19 percent respectively. 

READ MORE: Ukraine conflict: Will Switzerland impose sanctions on Russia?

Swiss companies working in both Russia and Ukraine also don’t expect any major consequences on their operations.

Among them is Stadler Rail: the Thurgau train manufacturer signed several “memorandums of understanding” with Ukrainian partners in 2021 regarding the development of the railways in that country.

The current crisis “could possibly lead to delays in the development of the market”, said said Gerda Königstorfer, group communications director.

The Zurich industrial group Sulzer, for its part, considers that its exposure to Russia and Ukraine is “minimal”. Russia accounted for only 3 percent of orders in 2021, and Ukraine for none.

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“The impact for Sulzer in the event of sanctions is negligible.”

Other companies that could be somewhat affected include Zug-based Nord Stream. This international consortium counts the Russian group Gazprom among its shareholders. It is responsible for the construction of two pipelines.

READ MORE:  Ukrainians in Europe: How will Russia’s invasion and the war impact your lives?

What happens in the instance of a shortage? 

While Switzerland may not store gas to any large degree, security of energy supply is maintained through the storage of extra-light heating oil. 

In the event of a crisis, plants are able to switch from gas to heating oil combustion. 

These are known as 'dual-fuel systems'.

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It is however difficult to determine how much strategic reserve Switzerland currently has as the reserves are kept by the private sector, rather than governments. 

The industry is required to keep emergency supply that will last 4.5 months

The Federal Office for National Economic Supply (BWL) told Switzerland's Aargauer Zeitung newspaper that energy companies were already planning for a possible breakdown in supply. 

"The operators have already become active," the BWL said.

"Operators of dual-fuel systems check their business continuity management and the filling level of their heating oil storage. This helps companies with dual-fuel systems to be able to switch from natural gas to heating oil in an emergency."

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