Gazprom has reduced the rate of filling underground storage facilities in Europe
Gas demand is growing due to the rapid recovery of the European economy after the pandemic, as well as cold winters and hot summers, which caused an increase in electricity consumption. The European Union has relied on renewable energy, but it cannot cope with the increased loads so far. Therefore, any reduction in gas supplies to the West now draws special attention. This happened on July 31, when the volume of pumped through the Yamal-Europe gas pipeline fell from 84 million cubic meters per day to 50 million. The reasons are unknown, but Gazprom is fulfilling all its obligations to European consumers. For seven months compared to last year, exports to Europe increased by 23.2% to 115.3 billion cubic meters.
Despite this, out of 66 billion cubic meters selected last season, only 27.6 billion cubic meters were replenished in European UGS facilities. The storage facilities were filled only by 57%, and gas prices rose above $ 500 per thousand cubic meters. It is possible to increase supplies to the West by increasing transit through Ukraine, which is economically unprofitable; for additional gas pumping, you will have to pay at an increased tariff.
The shortage of gas in Europe ensures the support of the majority of the EU countries for the idea of the need to launch Nord Stream 2 as soon as possible. Gazprom’s haste in this matter is understandable: it is advisable to launch the gas pipeline before the elections in Germany, at which opponents of the project may come to power. Pumping gas through it for us is already half-limited by the updated EU gas directive. This limitation can be circumvented through a legal loophole – if part of the pipeline is owned by an independent company or by obtaining an exception from the rules of the gas directive. Both options will be difficult to achieve if the main supporter of Nord Stream 2 in the EU – Germany – changes its attitude towards the project.
Gazprom is playing into the hands of the fact that European traders are also not particularly eager to pump gas into storage facilities at such exorbitant prices, said Aleksey Grivach, deputy head of the National Energy Security Fund. In his opinion, the uncertainty with the launch of Nord Stream 2 is one of the main factors supporting the abnormally high spot prices (for fast contracts) in the European market. tense market conditions, said Alexander Kurdin, an expert at the Analytical Center for the Government of the Russian Federation. Taking into account that Gazprom also has objective limitations on production capacity and the priority of domestic energy supply, it is difficult to expect that the company will now devote all its resources to filling European UGS facilities, Kurdin said.
Russia is fulfilling all its obligations on gas supplies to Europe
Other gas suppliers cannot replace Russia in Europe. Liquefied natural gas (LNG) from the United States, which stormed Europe last year, is sent to the premium market in the Asia-Pacific region (APR) as much as possible. Gas production within Europe is falling, while Algeria, Azerbaijan and Nigeria cannot increase supplies in the required volume. Russia, on the other hand, is waiting for the launch of Nord Stream 2, which, perhaps, will drop gas prices in Europe, but does not require payment for transit.