Russia, the EU and the price of gas: Who is really responsible for the gas crisis and how to solve it – BBC News in Serbian

Reuters

The price of gas is rising across Europe, and many accuse Russia of trying to use the situation to its own advantage.

Jake Sullivan, an adviser to the US Secretary of National Security, recently expressed concern that Russia is trying to use energy as a political weapon.

“I believe that Russia should respond to the increased demands of the market in Europe,” he said.

But how much is Russia really responsible for the current gas shortages and price increases?

How much gas did Europe get from Russia?

Map showing main pipeline routes from Russia to Europe
BBC

About 50 percent of the amount of natural gas in Europe comes from Russia.

Most of the remaining quantities come from Norway and Algeria.

Russia sends gas to Europe through several major gas pipelines such as Nord Stream, Yamal Europe and the Brotherhood.

The gas is collected in regional warehouses and then distributed to various countries across the continent.

During the pandemic, total gas exports from Russia to Europe declined as demand declined.

Although Europe then continued to be supplied with gas from Russia, the declining demand trend continued.

The volume of supply has been reduced, especially through gas pipelines in Ukraine and Belarus.

This led to a decrease in the amount of stock, and then to an increase in prices.

Is Russia fulfilling its commitments?

Gazprom, Russia’s leading state-owned energy company, supplies gas to Europe under two different agreements:

  • Long-term contracts that often last 10 to 25 years
  • One-time contracts for the delivery of a fixed amount of gas

Gazprom said long-term contracts were “the basis for a stable and sustainable gas supply.”

And it seems that this year they have fulfilled their own obligations from the contract with European customers.

However, Fatih Birol, director of the International Energy Agency, recently said that it is estimated that Russia, if it wanted to, could increase gas supplies by 15%.

Construction workers at Nord Stream 2 site in Lubmin, Germany
AFP
Workers on the North Stream gas pipeline 2

Some analysts suggest Moscow is now hesitant to supply gas to speed up permits for the newly built Nord Stream 2 pipeline, which runs directly from Russia to Germany.

This gas pipeline bypasses Ukraine, and its construction was the target of criticism from experts in geopolitics and environmental protection.

“A large part of the European media claims that Gazprom is deliberately denying gas in order to force the German authorities and the European Commission to approve Nord Stream 2,” says Jack Sharples from the Oxford Institute for Energy Studies.

But he adds that such analyzes are questionable.

Angela Merkel, the German chancellor, said that she had no knowledge that Russia was not fulfilling its contractual obligations.

“Russia can supply gas on the basis of contractual obligations, and not just like that,” Merkel said recently.

But it is important to note that there are no major one-off contracts at the moment, according to Gazprom.

“This leads us to the conclusion that Gazprom supplies gas according to existing long-term contracts, but does not provide additional quantities,” says Dr. Sharkles.

Kadri Simson, EU Commissioner for Energy, has a similar view.

“Our initial analysis indicates that Russia is fulfilling its obligations under long-term agreements, but is not providing additional supplies,” she told members of the European Parliament last week.

Sergei Ryabkov, Russia’s deputy foreign minister, told the BBC:

“In fact, Gazprom has even started extracting gas from reserves and pumping it into pipelines to stabilize the market.”

“We have never been in a position to put pressure through our gas supply.”

What is happening in Europe?

In gas storage facilities across Europe, the level of stocks is currently at about 75 percent, which is less than the average for this time of year, according to data from the Gas Infrastructure Europe website.

Gas stocks in Great Britain are currently at maximum capacity, but only five percent of the total quantities arrive in this country from Russia.

Gas supplies in Russia itself are below the average level for this time of year.

Adelin van Houte, an analyst at The Economist, says:

“At the moment, the Russian gas market is quite tense, winter is approaching, and production is approaching the maximum.

“All that limits the capacities for gas exports,” she stated.

There are several factors that affect the situation in Europe:

  • Cold weather at the beginning of 2021, due to which stocks were wasted
  • Rising prices in the spring and summer prevented retailers from buying for sale later in the year
  • limited quantities of gas from Norway due to maintenance problems
  • reduction of other energy resources such as wind power
  • growing demand for gas in other parts of the world

Why is the demand for gas growing??

The situation in the economy after the outbreak of the corona virus pandemic has led factories to increase production, which means that there is a greater demand for energy.

Europe also faces stiff competition in the fight for gas with countries from other parts of the world.

Over the past decades, demand for gas has risen sharply in Asia and the Middle East.

This has had strong effects on the liquefied natural gas (LPG) market, which accounts for about a quarter of European imports.

When demand for LPG is high, stocks are usually diverted to Asia to take advantage of rising prices.

In addition, Russia has increased the volume of gas exports to China.

A gas processing plant in the far east of the country was inaugurated in June and is expected to become one of the largest in the world.


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