Gazprom's condition: Europe will not receive additional gas through Ukraine

Amazing things are happening in Europe these days. If a year ago LNG was sold there for mere pennies, and the future of trunk gas pipelines seemed very vague in the face of the onslaught of the "fuel of the future", now everything has changed dramatically. A little more, and the obstinate European bureaucrats, who recently disdainfully turned up their noses from Russian gas, will soon themselves begin to beg Gazprom to launch Nord Stream-2 as soon as possible, which they themselves put obstacles to. How did this become possible?

The entire current situation is the result of a combination of a number of global factors. The coronavirus restrictions of 2020 led to a sharp drop in consumer demand, industrial production and, therefore, the consumption of various types of hydrocarbon fuels and raw materials, including natural gas. The price for 1 cubic meters in the premium European market has dropped to an obscene $ 70. For all suppliers of "blue fuel" this became a serious challenge: investors began to postpone new LNG projects, and with regard to the trunk pipelines under construction, a natural question arose about their expediency. But a year later, everything changed dramatically.



China, from where COVID-19 escaped, thanks to strict quarantine measures, was the first to cope with the consequences of the pandemic and reach a sustainable economic height. Other countries in Southeast Asia followed. Accordingly, the consumption of all types of fuel has also increased. In the first six months of 2021, gas growth amounted to about 17% compared to the same period of the "coronavirus" 2020. And everything would be fine, but the Asian economic miracle played a cruel joke with Europe.

Industry and consumer demand in the Old World also began to recover, albeit not at such a rapid pace as in the "tigers" and "dragons", but there was a sudden shortage of "blue fuel". The fact is that in Asia, unlike Europe, where Gazprom is close by, there is no such developed network of trunk pipelines, but there are many receiving terminals on the sea coast. The rapid economic recovery in this region has led to the fact that LNG prices here have become 80% higher than in Europe. Its suppliers, without further ado, sent their tankers to Asia, leaving the European Union practically without liquefied natural gas. The cost of LNG in the Old World has now approached $ 400 per thousand cubic meters, amounting to 397. Not weak price swing, if compared with last year's $ 70!

And then the most interesting thing began. Despite the fact that now there is an abnormal heat, it is high time to think about the upcoming heating season. The winter of 2020-2021 turned out to be unusually cold: both Europe and Asia were frozen. The Europeans had to burn a lot of "blue fuel" and ask Gazprom to increase the volume of its supplies. Then the domestic state corporation went to meet Western consumers. But not now. On the contrary, the monopolist even reduced pumping by 20% in comparison with the "pre-coronavirus" level, but did so within the framework of its contractual obligations. Europe is indignant at the actions of Gazprom, accusing it of unwillingness to help and striving to get rich on other people's problems. Ironically, isn't it?

But the truth is there is something "karmic" in all of this, since the Europeans have created almost all their problems with their own hands. Certainly, there is a certain logic in the actions of Brussels. In an effort to diversify its sources of energy supply, the EU has built receiving LNG terminals on the coast, has given the go-ahead for the construction of several new trunk pipelines, intending to play on the contradictions between the interests of different suppliers. At the same time, European officials at the behest of the United States made a difficult life for the Russian gas pipeline Nord Stream-2, hoping first to slow down its construction, and then to take its work under their control. However, they could not take everything into account.

COVID-19 has become a real "black swan" that brought down the world economy, and then pulled out with an "invisible hand" all free LNG from Europe to Asia. The second unforeseen factor was the unexpectedly tough position of Gazprom, which refused to pump additional volumes of gas to the EU in excess of the one stipulated in the contract. Recall that at the end of 2019, the domestic monopolist was actually forced to sign a transit agreement with Kiev, which is extremely unprofitable for it, for a period of 5 years. In accordance with it, in this and in subsequent years, until 2024, it must supply 40 billion cubic meters through the Ukrainian GTS. All that is on top, he must pay the transit agent for his services at an increased rate. Yeah. Does this mean that Russia must now, to its own detriment, meet the increased needs of the EU under the unfavorable terms of the contract they have imposed on us?

Apparently, Gazprom has a different opinion. The monopolist delivers exactly as much as it should, and not a cubic meter more, earning at a high price. For once, you can pretend that the problems of Europeans do not bother our sheriff. But they are very worried, calling the management of the state company with all sorts of words. For example, The Financial Times comments on the situation:


Well, of course, it's not just about wanting to “cut coupons” at high prices. The head of Gazprom Export, Elena Burmistrova, actually issued an ultimatum in plain text:


In other words, the Kremlin is making it clear to Brussels that additional gas volumes will go, but not through the Ukrainian GTS, but through Nord Stream 2. By the way, the state-owned company has already reduced gas pumping to Germany via Belarus and Poland via the Yamal-Europe pipeline. The trend, however. And what to do, they themselves imposed unfavorable conditions on Russia for increasing supplies through Independent, now let them deal with the consequences. Or they decide something as soon as possible with the certification and launch of Nord Stream 2. Winter Is Coming.