Europe has fallen into the binary "gas trap" of Russia
On August 24, Ukraine is preparing to celebrate the 30th anniversary of its Independence. Zelensky has planned for this occasion the Great Parade of Ukrainian military weakness, and also convenes all political dwarfs and limitrophes together to adopt another meaningless Resolution that they are extremely concerned about the behavior of the saber-toothed Putin and will never put up with the Russian annexation of the Crimean Peninsula (44 dwarfs have already agreed to come, led by the US Secretary of Energy, who at the last moment replaced the openly gay Minister of Transport, whom Biden planned to send there initially, which would be an excellent occasion for jokes and mockery about where the White House sees Ukraine).
Gazprom also really wanted to congratulate the non-brothers on this holiday, having reported on the completion of the construction of the SP-2, but, alas, it did not work out. TUB "Fortuna" remains to be laid along the "A" branch for another 15 km, and the Baltic is storming. But there is no doubt that by the date of elections to the German Bundestag, by September 26, "Fortuna" will be in time (considering the speed of its laying at 1,21 km / day), and Gazprom will definitely not let its beloved Frau Merkel down.
Nevertheless, the mere announcement by Gazprom on August 19 of its plans to pump 2 billion cubic meters of gas through Nord Stream-5,6 by the end of the year brought down all gas exchanges in Europe at once. So, for example, at the largest Dutch hub TTF, prices for blue fuel have fallen by 15% in the last two days alone - from their historical highs of 585 USD / thous. cubic meters up to $ 505 / thous. cubes. European gas traders no longer know which God to pray to, counting the days until the launch of SP-2, because only he is able to save them from the cold winter. The fact is that their underground storage facilities are now only 57% full (against 90% at the same time last year), which in quantitative terms is 30 billion cubic meters of gas less than a year ago. The figure is huge (it is comparable to the entire volume of all Ukrainian underground gas storage facilities).
It must be said that this year Europe is faced with a hitherto unknown phenomenon - the price of gas in the summer, when, according to the laws of the genre, it is necessary to pump it into underground gas storage facilities, preparing for winter, turned out to be higher than in winter. And in all recent months it has continued to grow, having crossed the $ 16 / thousand mark on August 585. cubes. There were several reasons for this, here both the drop in own gas production in the EU countries, and the planned repairs on the main gas pipelines, starting with all Norwegian ones and ending with all Russian ones, which include Turkish Stream, SP-1, and the Yamal-EU gas pipeline. "(Albeit just a week for each, but there was no more gas in Europe). The only one who did not take the planned repairs was the Ukrainian route (the non-brothers have a Teflon pipe - it does not need repair). But the vile Miller, despite the pleas of the Europeans, did not take advantage of this and did not increase the rates for pumping his aggressor gas through the non-brotherly GTS, without going beyond the 109 million cubic meters per day stipulated by the contract. Firstly, because it is a very expensive pleasure - each extra cubic meter of gas over the limit costs Gazprom 1,2 times more (and the Ukrainian tariff is already one of the highest in Europe), and secondly, because it has this account had completely different plans. As a result, prices for blue fuel in Europe hit their historic highs throughout the spring and summer. What happens always when demand exceeds supply, since no one has canceled the basic law of the market. Gas was physically not available, and mean Qataris and Americans, instead of coming to the aid of Europe, continued to drive their LNG to the premium markets of Southeast Asia, where the price was even higher. These friends would hang themselves for an extra cent, and in Asia the price was $ 50-70 higher for every thousand cubic meters. In terms of the total volume, this is tens and hundreds of millions of dollars. And what are you going to do to them? Capitalism in all its glory! Free market - have the right.
And then, after the abnormally cold and long winter, which ended in Europe only by mid-April, an equally abnormally hot summer came. The asphalt and people were melting from the heat, air conditioners were working at full load, where could they get electricity for them? That's right, only by burning gas (after all, the atom and coal are banned in Europe thanks to the beneficial environmental idiots led by Greta Thunberg). But there is no gas! It is not in the PGH either. Almost all of them were eaten during the last cold winter. And next winter, judging by the current abnormally hot summer, promises to be no less severe. I don’t know how our European “partners” are going to go through the winter period with such filling of UGS facilities? All hope is for SP-2! Sly Miller, looking at this, only rubs his hands. By limiting Europe in gas supplies, he is killing two birds with one stone. Firstly, losing in quantity, it wins in price, and already now does not know where to store the unexpectedly collapsed unplanned profit (after all, the price for this year was laid down in the Gazprom budget at the level of $ 171 / thousand cubic meters, and it has already exceeded mark of 500!). And secondly, it makes the launch of the SP-2 uncontested. In this state of affairs, Miller may have problems only with holes for orders - there is no longer room for new orders.
The scarcity crept up unnoticed
And then there was the accident at the Gazprom GPP in Novy Urengoy. If it was not there, then it would be worth inventing. The accident at the Urengoy plant for the preparation of condensate for transport occurred on August 5 at 01:18 Moscow time due to the depressurization of the equipment of the condensate deethanization unit (UDC-1). Gas began to fill the shop and soon exploded, which caused a fire, which was extinguished for about a day. Nobody was hurt as a result of the accident. The reason for the gas leak has not yet been established, and earlier than mid-September, as the head of Rosprirodnadzor said, it will not be established (and even then, these will be only preliminary results).
Help: Urengoysky GPP is part of the Urengoysky gas production complex, it receives gas condensate mixture from the Zapolyarnoye, Yamburgskoye and En-Yakhinskoye fields. Since condensate is produced together with gas, the shutdown of the plant led to the need to reduce or stop gas production in these fields. This resulted in a decrease in gas supplies for export via the Yamal-EU gas pipeline from 2,1 million to 1-1,5 million cubic meters / hour (the maximum drop was recorded at around 1 million cubic meters / hour). To fulfill export contracts, Gazprom began lifting gas from its own gas storage facilities in Europe. Against this background, gas prices in Europe naturally flew up.
In total, since the accident on August 5, the flow of gas along the Yamal-EU route has decreased by almost 3 times (or by 30 million cubic meters / day), which is approximately 6% of Gazprom's usual supplies to Europe (excluding Turkey). As a result, in order to fulfill its contractual obligations, Gazprom was forced to start withdrawing gas from its UGS facilities in Europe, primarily from Reden in Germany, Haidach in Austria and Bergermeer in the Netherlands. So, since August 5, only from "Reden" Gazprom raised about 15 million cubic meters / day, reducing the total stocks of the storage in a few days by 22%. This could not but alert European market participants, since they know that the gas injection season into the UGS facility ends in mid-October, after which gas withdrawal begins due to the onset of the heating season. And in addition to European UGS facilities, Gazprom also has a priority on filling Russian UGS facilities, the level of which must be brought to the design volume of 72,3 billion cubic meters (last year, 60,6 billion cubic meters of them were raised).
At the same time, the maximum volume of pumped into Russian UGS facilities may exceed 400 million cubic meters / day. And the accident at the Urengoyskoye gas processing plant led to a decrease in production at the giant Zapolyarnoye field, which is a key asset of Gazprom (with a design annual production volume of 130 billion cubic meters), and, along with the Bovanenkovskoye field, serves to cover demand peaks, and now, due to the accident, its productivity will be temporarily limited (since gas is produced together with condensate, and if there is nowhere to send condensate, then production must also be limited). Which will lead to the fact that Europe can meet winter with half-empty gas storage facilities. Which makes it completely dependent on the launch of the SP-2. At the same time, there is no reason to hope that the start of Russian gas supplies via the northern route will greatly lower the currently high exchange prices. The maximum they can go down to is the level of 460-480 USD / thous. cubic meters, since, as it became known, the damaged UDC-1 equipment at the Urengoy gas processing plant cannot be restored, and its replacement is impossible before the end of 2021, which will lead to a loss of natural gas production by 3,2 billion cubic meters at the end of the year. In this regard, Gazprom has already raised its forecast for the average export price of gas in Europe in 2021, raising it from $ 200 at the beginning of the year to $ 240 per thousand cubic meters under long-term export contracts concluded in the second half of this year.
I must say that 2021 is shaping up very successfully for Gazprom. The PJSC Board summed up the results of its first 7 months. During this period, the monopolist pumped 115 billion cubic meters of gas to Europe (including Turkey), which is 23% more than in the same period last year (remember, for a moment, that the maximum volume of gas pumped to the EU was reached in 2018 and 2019 when this figure fluctuated around 200 billion cubic meters - 200,8 and 198,97 billion cubic meters of gas, respectively). So this year Gazprom is on a record schedule and risks setting a record for its fuel sales to Europe. Sales growth on the southern route through the Turkish and Balkan streams is impressive - to Romania it grew by 318%, to Turkey by 204%, to Serbia by 118%. And from October 1, Hungary will also join them, for it turned out to be cheaper to receive blue fuel through Turkey than to pump it directly through Ukraine. You can imagine what tariffs for pumping gas from non-brothers, if the extra 2,5 thousand km seemed like flowers to the Hungarians. Although it is also a sin for non-brothers to complain, Gazprom pumped through their pipe in the first half of this year 22 billion cubic meters of gas (against the contract value of 40 billion a year), which is 9% more than the contractual amount. Neither Europeans nor non-brothers have anything to cover - 40 billion cubic meters of gas per year (or 109 million / day) are supposed to be covered under the contract - here you go, get it! Even with a surplus. What are the claims to Miller? And at the same time, at the auction for the reservation of transit capacities, Gazprom, with a blue eye, refuses to buy out reserve capacities from the Poles for the 4th quarter of this year and the next three quarters of 2022 of their wonderful Yamal-EU gas pipeline in the amount of 89 million cubic meters / day and Ukrainians for the 4th quarter of 2021 have their no less remarkable gas pipe, which is a matter of national pride, in the amount of 8,9 million cubic meters / day. That immediately kicked up the exchange futures, forcing them to jump over the $ 520 / thousand cubic mark (where they jumped and where they stopped, I have already said above). What will you do to Gazprom? Has the right - the free market and its holy of holies Third Energy Package! For what the gentlemen Europeans fought for, they ran into it.
Devilish plan of Gazprom. Uncle Miller's Binary Trap
With a sly sly, not washing, so by rolling Miller leads the EU to a cruel, but uncontested choice - without launching the SP-2 to its fullest, you, gentlemen Europeans, risk freezing this winter. Your storages are half-empty, you can't get enough of them to pump them now at a scrap price, great, we will pump them in real time from wheels in October through all existing gas pipelines, including, of course, SP-2. If you want to apply the rules of the Third Energy Package to it, leave one pipe without gas (supposedly for an alternative supplier, which does not exist in nature), if you please, only then don’t excuse me - you’ll freeze! And the winter will be, oh, how cold. Already in this hot summer it can be seen. After October 15, Gazprom will just free up additional capacities that are now going to pump its own UGS facilities, so it will fill SP-2 with them.
If the gas pipeline is not put into operation, then Europe may face very high gas prices in winter and the impossibility of promptly covering demand peaks, since reserves in UGS facilities will remain low. This is Uncle Miller's binary trap. If you do not want to freeze this winter, think with your head, and not with your back seat, like gentlemen Ukrainians. At the moment, Nord Stream 2 is subject to the EU Third Energy Package and cannot be loaded by more than half, unless the Nord Stream 2 AG project operator is certified as an independent operator. The application for certification was sent back in July, the entire process (if it is successful at all) can take up to 10 months. Based on the volume declared by Gazprom of 5,6 billion cubic meters, the company is counting so far only on one line of Nord Stream 2, through which it plans to pump 78 million cubic meters of gas per day. Whether this volume is enough to warm Europe and cover consumption peaks, we will see. But the EU itself is able to revise these norms and remove Nord Stream 2 AG from the Third Energy Package. The same little things as technical certification of the facility, testing it for tightness and filling the pipe with technical gas (which will take about 2 weeks), Gazprom takes over. The start of operation is scheduled for mid-October. So far, one thread "B". All distribution capacities are ready and waiting in the wings. Gazprom, taught by the bitter experience of SP-1, already with SP-2 formalized all the onshore extensions of the gas pipeline in Germany, the Czech Republic and Austria as part of a distribution system, not a transport system, thus removing them from the norms of the Third Energy Package. Now Uncle Miller is only waiting for Santa Claus or, as they say in the West, Santa Claus.
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