What will Europe do after the winter gas crisis

The largest energy crisis in recent years continues to develop in Europe. Due to the shortage of gas, some enterprises have already begun to close, the prices for electricity and hot water for consumers are growing. European UGS facilities are half empty, and all this is happening against the backdrop of the beginning of the heating season. The old world will have a hard time this winter. But what will happen after the crisis is over and the spring warmth returns? What conclusions will be drawn from what happened?

Undoubtedly, the EU leadership will make its own conclusions, and they may turn out to be very radical. Let's try now to imagine how the energy market can change as early as 2022.

Who is to blame?

First of all, they will clearly be looking for the main culprit, and, alas, Gazprom is ideally suited to his role, according to the Western world. The Russian monopoly does not even make much of a secret that it is supporting an artificial deficit in Europe in order to push through the permit to launch Nord Stream 2 more quickly. The situation is indeed not entirely unambiguous.

On the one hand, the state corporation acts strictly within the framework of existing contracts, without violating anything from the point of view of the letter of the law. Moreover, the fact that Europe, which was strenuously putting obstacles in the way of the implementation of the Russian-German pipeline, ended up without gas itself, there is a kind of "karmic" justice. On the other hand, Gazprom's actions, or rather inaction, is essentially the use of the gas pipeline as an instrument of economic and political pressure on Brussels, that is, the very “energy weapon” about the danger of which the American policy and their allies in the EU.

Perhaps tactically Moscow will be able to achieve its goal by launching Nord Stream 2, but strategically it will only lose from such an approach. They will not forget us and will not forgive such geopolitical pressure on the "civilized" West. For Gazprom, at best, this means that the European Union will insist on liberalizing gas supplies through the new pipeline network. In particular, 50% of the capacity of Nord Stream 2 may go to Rosneft, about which we will discuss in detail told earlier.

Moving away from the spot to the forward?

Most likely, the EU leadership will reconsider its attitude to the current gas pricing system. Recall that since the 60s of the last century, a model based on long-term export gas contracts (DSEGC) operated in the Old World. The price of “blue fuel” was indexed depending on the exchange price of oil, diesel fuel or coal. A take-or-pay formula was used, which was convenient for suppliers.

However, the crisis of 2008-2009 made big changes, when real market prices turned out to be lower than those in long-term contracts. Importers began to insist on market prices determined on exchanges. The cost of "blue fuel" is formed and varies depending on a variety of factors: weather, UGS filling, etc. In 2020, the coronavirus pandemic dropped stock quotes to abnormally low values, and in 2021, XNUMX cubic meters of gas at hubs set historical records.

So, what conclusions can the European authorities draw from what happened?

At first, it would be prudent to switch from spot contracts, which are valid for only a month, to long-term forward contracts, which cover a season, if not an entire year. Having contracted certain, calculated in advance, volumes of supplies, consumers will be able to hedge themselves, even if they lose on the difference in price.

Secondlyit is possible that the European partners will decide to increase the share of long-term contracts for gas supplies via the pipeline system.

LNG-prom?

It is also possible that the European energy crisis will force Washington to take radical steps to ensure the energy security of its ally in the Old World, NATO. There is no doubt that an active information campaign will soon begin against Gazprom, which will be accused of using gas supplies as a geopolitical weapon. American politicians will say that they, they say, warned the "cousins", but they did not listen to them, and that's how bad it turned out.

In exchange for Russian gas, the United States has long been trying to add its own LNG. But here's the problem: private companies themselves decide where to sell it. So it became more profitable in Southeast Asia, they sent their tankers there. And what can you do? The only solution would be to translate this question from economic into the political plane. The US authorities, if they wish, can take control of all gas exports, establishing a monopoly for the state corporation, making their own analogue of Gazprom. This is not welcome, but there is nothing impossible in it, if Uncle Sam so decides. In more detail, we are about some scenarios for the creation of the American "LNG-Prom" already told earlier.

Thus, following the end of the gas crisis in the EU, the following tendencies are visible: greater centralization of the energy market in the West while trying to impose a more liberal model on Russia as the largest exporter.