When construction began on the second Nord Stream pipeline, which would double the volume of natural gas vessels to Europe – mostly to Germany – the European Union wasted no time in expressing its opposition to more Russian gas.
Led by Ukraine, which fears losses in the North Stream 2 traffic rate, and the Baltic states and Poland, which already rely too heavily on Russian gas supplies, this opposition sparked legal battles and threats of sanctions if Russia “tries” to use the pipeline as a weapon against other countries “ seconds to German Chancellor Angela Merkel.
The project also caught the attention of the new global gas export giant, the United States, for which the European market is the most lucrative thanks to its repeated desire to diversify gas supply sources.
The United States imposed sanctions on Russian participants in Nord Stream 2 and also threatened its Western European partners with sanctions. Germany opposed this, which is why Nord Stream 2 has proceeded and is now about to end. Still, Europe is facing a gas crisis this winter and is looking forward to seeing Nord Stream 2 come into operation.
Earlier this year, when Gazprom met its gas supplies to Europe on long-term contracts, it was not enough to fill Europe’s empty warehouse and prepare it for winter. Ukraine immediately took the opportunity to accuse Moscow of “blackmail”, but the EU, in an unusual move, disagreed.
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An EC official reported that “there were no indications of specific behavior on the part of our suppliers to raise prices” he said the Financial Times in July. “The current situation is a reflection of the dynamics of the global market. All EU regions now have access to more than one source of gas, so they are less vulnerable to supply compresses from an individual supplier, ”he added.
It is a love-hate relationship of the purest. Europe has been desperate to diversify its gas suppliers, but the only diversification it has achieved is through liquefied natural gas and Trans-Adriatic conduit, which at the time was put into operation – last year – had been delayed for years.
However, the TAP, which transports Azerbaijani gas, has only a fifth of the capacity of any of the Nord Stream pipelines: it can move 10 billion cubic meters a year, which is equivalent to 2% of European gas consumption. . In addition, most of the gas that TAP provides to Europe goes to Italy. The pipeline could be expanded, but in the future.
Meanwhile, Europe is facing a gas shortage that caused an executive of the British company Centrica, the company that owns British Gas, to warn that the British are facing higher electricity bills this winter and that some companies they could be forced to curb activity, not just in the UK. but also in Europe.
“We have not seen any price situation like this before. If you can’t attract supply, the only alternative is to reduce demand to balance the market, ”Cassim Mangerah told FT earlier this month.“ If we see a supply crisis this winter, the other way to balance the market is through economic activity. If prices are really high, then some gas-dependent companies in the UK and Europe may simply decide not to produce. “
Meanwhile, Ukraine is still calling on Europe to stop Nord Stream 2 despite this guarantees of Chancellor Merkel, personally, that would not allow Gazprom to deprive Ukraine of the traffic rates it now receives for Russian gas it sends through other gas pipelines to Europe.
Europe is therefore upset by Russian gas because of the influence it gives to a country that the EU considers unkind, to put it mildly, but at the same time, it is increasingly thirsty for gas due to a prolonged winter of last year it drained its reserves. That winter was unfortunately followed by a busy Asian summer that caused LNG shipments to be diverted from Europe to Asia because Asian buyers were willing to pay higher prices. And here comes the turn: even if attempts to stop Nord Stream 2 fail, the new pipeline will not lead to an increase in European gas supplies from Russia.
The reason is simple: whenever the pipeline begins, Gazprom’s planned deliveries to Europe for 2021 are set at 183 billion cubic meters. And with or without Nord Stream 2, that figure will remain unchanged, the state-owned company said in late August. The new pipe could send an additional 5.6 billion cubic meters, the head of Gazprom’s finance department said during a profit call. But that won’t make a big difference.
So Russia already uses the gas weapon that the EU and Ukraine have feared for years? This may be the case, according to some observers, for a recent one article for Energy Intelligence ‘Vitaly Sokolov. On the other hand, Gazprom is fulfilling its long-term contractual commitments with Europe, so it would be difficult to accuse the company of deliberately cutting supplies. There are no cuts.
Chancellor Merkel recently said that in twenty-five years, Europe will no longer need Russian gas. Undoubtedly, this will make the continent much more energy-independent and eliminate a major headache that keeps Brussels officials awake at night. Whenever it happens.
By Irina Slav for Oilprice.com
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