Whose "invisible hand" got into the pockets of Europeans and what does Gazprom have to do with it?

Europe is now in turmoil - gas prices at European hubs are updating one historical maximum after another, and electricity prices have skyrocketed. Burgers faint at the sight of receipts for electricity and heating, and proud British have switched to pasture - due to a lack of carbon dioxide (which is a by-product of fertilizer production, which was stopped due to soaring prices for gas and electricity), there was nothing to kill the bird and livestock before slaughter, as a result all Britons are at risk of becoming vegetarians en masse. And this is just the smallest of the problems that have now fallen on the Europeans. And you know who is to blame for this - Putin and Miller. Two Hollywood villains who are nightmares now in poor Europe. Let's figure out who is there to whom Rabinovich and whether he was there at all, (Rabinovich is a common noun, instead of him you can enter Abramovich, Usmanov, Mishustin, Miller, Lavrov, Shoigu, Putin, the list is long, we are always to blame for them only because, what we are).

And just a year ago, in the spring and summer of 2020, the price of gas on European exchanges fell to $ 65 / thousand cubic meters (for comparison, PJSC Gazprom sells gas to its consumers in Russia at a higher price - $ 70 each). Why, then, gentlemen Europeans did not reproach Gazprom for reducing gas supplies to Europe? Because then, in the midst of the coronavirus and during a warm winter and filled to the neck of underground gas storage facilities, no one needed it there. Gazprom incurred losses, and European officials rubbed their hands - the idiot's dream of the invisible hand of the market came true. Then the prices for long-term contracts exceeded the current prices at gas hubs. And at times. European officials shook hands and remembered with admiration the one who came up with the Gas Directive of the Third Energy Package. They poked their crooked fingers at those countries that foolishly tied themselves to long-term contracts with Gazprom, and said that these fools could now go to the stock exchange and buy themselves a couple of kilograms of market gas at a price several times lower than they, idiots, buy from the Russian monopolist.



But the music did not play for long in the offices of European dreamers. It took just a year. And already this year, everyone who, by stupidity, tied themselves into contracts with the vile Gazprom, consistently receive "the most aggressive gas in the world" at a consistently low price, and those who believe in the fairy tales of European officials, adherents of the invisible hand of the market, go to hope to get hold of a couple of kilograms of damned methane there (it doesn't even matter whose production). But he is not there, and the one that is clearly beyond their means. Now this invisible hand of the market is brazenly rummaging through the wallets of the British, Danes, Swedes and even burghers, who have not yet had time to surrender to the mercy of Miller and Co. *, shaking out the last pennies and cents from their pockets to pay for the electricity and heat tariffs soaring into the sky. In Britain, whole industries are already stopping (in particular, metallurgical and petrochemical enterprises) - at such a price of electricity, no one needs their products.

The invisible hand of the European gas market

It should probably explain what is happening here. And for this we will have to return to 2019, when, in anticipation of problems with the supply of Russian gas due to the protracted negotiations between Russia and Ukraine regarding its transit through the territory of Independence, the whole of Europe, not knowing how these negotiations would end, scored its own and not only their own, and even Ukrainian underground storage facilities with the hated Russian methane. The year 2020 has come. The agreement, thank God, was signed on December 31, 2019 (moreover, on conditions unfavorable for the Russian Federation), but the year was not only abnormally warm, but also coronavirus, gas consumption fell along with the price of it. Gazprom incurred losses, and the Europeans thanked God who had sent them the Third Energy Package, buying gas on the stock exchanges, where it was even cheaper than the gas they pumped into the underground gas storage.

But everything comes to an end. The end of the 2020 coronavirus has also come. It was replaced by 2021, with its abnormally cold winter and no less cold spring, which devoured all the reserves of European gas accumulated in the UGS. And then that very invisible hand of the market was activated, which, in the absence of real gas, began to raise the price for it. At the same time, Gazprom regularly fulfilled its contractual obligations under long-term contracts and even exceeded it, exceeding the last year's indicators by 23%, but there was still not enough gas. And the reason for this was not at all the insidious Miller or the dastardly Putin, but the very same LNG suppliers from the USA, Qatar, Algeria and Nigeria, who in caravans send their liquefied gas instead of freezing Europe to the premium markets of Southeast Asia, where the price is due to an equally cold winter, when All their wind and solar stations were covered with an ice crust, and in general flew into the heavens, breaking through the ceiling of $ 1100 / thousand cubic meters (in Europe then the price was around $ 350). Who was to blame for this situation - Gazprom with its 34% share or the rest of the gas suppliers holding 66% of the European gas market? Gazprom is not rubber, in its best years it supplied only 200 billion cubic meters of gas to the EU per year, while Europe ate only 600 billion cubic meters of imported gas (not counting its own gas). Neither Miller nor Putin is able to cover such a shortage. Let's not shift from a sore head to a healthy one.

But after the abnormally cold and long winter of 2021, 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 in Europe, thanks to the beneficial environmental idiots led by Greta Thunberg, have long been banned). But there is no gas! It is not in the PGH either. What do prices do in this case? That's right - they are growing. Not many dared to replenish their UGCs on a growing trend (now those who have not done so will download them at a higher price and curse the day when they hoped for the invisible hand of the market).

And then there was the August accident at the Urengoi gas processing plant, which limited the ability of the Russian monopolist to supply its natural gas by approximately 3,2 billion cubic meters (the figure was calculated at the end of the year). It was necessary for Gazprom, in order not to disrupt its contractual obligations, to raise gas from its European underground gas storage facilities (primarily from Reden in Germany, Haidach in Austria and Bergermeer in the Netherlands). As a result, "Reden" meets this winter with almost zero residues (at the rest of the UGS facilities the fullness is about 70%). But the accident is force majeure and it is not even comme il faut to blame Gazprom for this. The British, on the other hand, do not blame the wind, which died down in the North Sea, stopping for a whole month all their wind farms that generate electricity there for Foggy Albion, which led to an increase in electricity prices and forced Britain to uncover the mothballed coal-fired thermal station. As a result, only those countries that had long-term contracts with Gazprom won, the rest can only shake the invisible hand of the market and thank European officials for having so much fun now.

The point is that prices for long-term contracts according to the traditional Groningen model are tied to the price of oil and are adjusted with a time lag of three, six and nine months (each signatory has its own lag). That is why in 2020 they exceeded the stock exchange ones, and in 2021 they are growing upwards at the speed of a snail (so far, over the past 9 months, Gazprom has raised them from $ 199 to $ 269 per thousand cubic meters - compare with the stock exchange, which has already exceeded 1100, and tell me who has benefited from this?).

And we know the names of these people. In 2020, Miller's subsidiary Gazprom-Export supplied 174,9 billion cubic meters of gas to Europe. Of these, 78% were in Western Europe and 22% in Eastern. Among the leaders are Germany (45,84 billion cubic meters), Italy (20,80), Turkey (16,40), Austria (13,22), France (12,39), the Netherlands (11, 81), there is even proud British (6,03), Poles (9,67), Hungarians (8,64), Czechs (5,01) and Slovaks (8,62). 21 countries out of 27 EU members (plus Turkey and Britain, which are not EU members) used the services of Gazprom - including 12 Western Europe and 11 Eastern. Slovaks bypassed the Czechs in gas consumption only because their indicators conceal the “reverse” gas they receive for non-brothers from Ukraine. While everyone is happy, no one complains (except for non-brothers and Poles, but let's not talk about the poor).

For example, the Austrians, instead of following the advice of European officials and, having abandoned long-term contracts, purchase gas from European gas hubs (exchanges), back in 2015 signed a long-term contract with Gazprom for the supply of Russian gas to Austria at a fixed price (about $ 240 / thousand cubic meters) until 2040. The Hungarians have recently done the same, having signed a contract with Gazprom for 15 years, up to and including 2036. The agreement entered into force on October 1 this year. Under the new agreement, Gazprom will annually supply 4,5 billion cubic meters to Hungary with the possibility of changing the volumes of gas supplied in 10 years. At the same time, 3,5 billion cubic meters will go through Serbia (read - through the "Turkish Stream") and 1 billion cubic meters through Austria (read - through SP-2). All bypassing Ukraine. According to the Hungarian Foreign Minister, who signed an agreement with Gazprom on behalf of Budapest, his country will now buy gas "at a much more favorable price than under a contract that has expired." pumping gas through itself, which, despite the long distances, became much cheaper to receive it through the TP and SP-2). About dad Lukashenko, who recently extorted Russian gas from Putin for another year at a price of $ 128,5 / tsd. cubes, already even talking here is somehow inconvenient.

The law is not written to fools

But Poland, which at the end of 2022 expires a current long-term contract with Gazprom for the supply of Russian gas, solemnly announced that from 2023 it is not going to renew it and plans to completely switch to gas of its own production and liquefied natural gas of American and Qatari production. I would like to wish the Polish comrades good luck and a fair wind in the back. A woman with a cart - it's easier for a mare! But no matter how pathological hatred of Russians and a sense of their own exclusiveness played a cruel joke with the descendants of the proud gentry. Driven solely by this feeling, a year ago, they refused to prolong the long-term agreement with Gazprom, which expired in May 2020, which has been in force since the 90s of the last century, for the transit of Russian gas through their territory via the Yamal-EU gas pipeline. transit capacities from the local operator Gaz-System in accordance with European energy rules, in accordance with the norms of the Third Energy Package, when the price is formed by the market in the course of bidding at relevant auctions, as a compromise between the supply and demand of all those wishing to buy these capacities, in accordance with their needs (for a day, for month, quarter). And Gazprom, despite the fact that it was the only one willing to participate in these auctions, had to play by their rules, so as not to frustrate its obligations to gas recipients in the EU.

But with the commissioning of SP-2 at its design capacity, the situation may radically change. Both the Poles and their Ukrainian colleagues have already noticed this when, in August 2021, Gazprom refused to book the reserve capacities of the Polish Yamal-EU gas pipeline from the 4th quarter of this year to the 3rd quarter inclusive of next 2022, and their Ukrainian competitor glorious Ukrainian GTS for the 4th quarter of this year. And what will you do to him? Eligible - read the Gas Directive of the Third Energy Package. Wait for an alternative supplier. What, is not it? Weird. And European officials believed that there should be. All questions to them. Although the launch of SP-2 threatens primarily not Ukrainians, who until 2024 are protected by a contract for pumping at least 40 billion cubic meters of aggressor gas a year through their GTS, namely the Poles, who, after refusing to prolong the transit agreement with Gazprom, are now wondering why their auctions for the sale of the reserved capacity of their wonderful pipe no one comes. For reference, the capacity of the Yamal-EU gas pipeline is 35 billion cubic meters of gas per year. What the Poles were going to fill it with, only God knows.

Maybe they are counting on their unfortunate Baltic Stream, which they are pulling from Norway along the bottom of the Baltic and North Seas? But even if they manage to defeat the Danish field mice and drag it to their territory, then its capacity is only 10 billion cubic meters of gas per year. At the same time, own gas needs by the beginning of 2023, according to the calculations of the Polish national gas transmission operator Gaz-System, should increase to 22 billion cubic meters of gas per year. The growth is due to the increasing demand for gas from thermal power plants of gas generation in connection with the withdrawal, in accordance with EU requirements, from coal-fired thermal power plants. How are the proud Poles going to make up for the shortage? American and Qatari LNG? Oh well.

I'm already tired of explaining to all the unreasonable Khazars that there is no extra gas in Europe (it’s stupidly not in nature!), If you refuse direct supplies of Russian gas you hate, then you will buy the same Russian gas from the Germans, only at a higher price. The Germans have nothing against it. If you don't want it from the Germans, buy it from the Austrians, they have the same Russian gas only in profile. Your beloved Norwegians, Algerians, Dutch have no extra gas for you. By the way, you can cross out the Dutch from this list, they will have no gas even for themselves in 2023, they will buy gas from the Germans that came through the Russian pipe, or dream of LNG of American origin.

I am already silent about the fact that American LNG does not exist in nature, it is simply produced on the territory of the United States, but in fact it belongs to the companies that bought it, not of American origin, and they will take it to where they pay more, and this is not Europe at all, but premium markets in Southeast Asia (at least it has been so far). But even if you close your eyes and imagine that something like this has happened (well, what does not happen in life ?!), and LNG carriers of American origin will go to the Polish terminals, then it is worth remembering that the capacity of the only LNG they currently have is terminal in Swinoujscie 5 billion cubic meters of gas / year with the possibility of expanding to 7,5 billion gas per year, then even after that the total capacity of their regasification terminals will be only 1,5 billion cubic meters of gas, which, given their own natural gas demand of 4,5 billion cubic meters of gas / year, clearly will not help their national oil and gas operator PGNiG to fill Yamal-EU and enter the EU gas market with your proposal.

If the Poles do not know how to count themselves, then I will help them. The "cheapest" in the world, but with the atoms of freedom, American liquefied natural gas - 12 billion cubic meters (I count to the maximum), I can also add Qatari LNG to it, I'm not sorry, I still can't swallow more than 12 billion Polish LNG terminals in a state (did anyone see on the map where Gdansk and Swinoujscie are and where Qatar is located, to swim there, not to swim, not much closer to America - but what can't you do to annoy the Russians?). We add to it Norwegian pipeline gas via the still non-existent Baltic Stream - another 10 billion cubic meters. Total: 22 billion cubic meters. The Poles closed their own need. Fine! And how are they going to help non-brothers with their need for imported gas at 10 billion cubic meters / year. And they were still going to sell it to Czechs, Lithuanians and Slovaks. For everything, the Poles have 5 billion cubic meters of gas of their own production. There is clearly not enough for all the suffering. They can be shoved into Yamal-EU, they can be delivered via specially built interconnectors to Ukraine and Lithuania, this will no longer cause gas, and the wonderful Polish pipe leading from Russia to Europe remains empty at 6/7. This is the result of the victory of stupidity and Russophobia over common sense. Their Ukrainian colleagues will soon come to this result. It remains to wait until the end of 2024.

Summary

To summarize. According to its contractual obligations, Gazprom is to pump 183 billion cubic meters of gas this year to its European consumers associated with long-term contracts. It's minimum. For the first 8 months of this year, according to PJSC reports, summed up in September, it has already pumped 138,6 billion cubic meters, from which it can be concluded that he delivered to the EU, taking into account Turkey, 2018 billion cubic meters of its product. Gazprom is fulfilling and overfulfilling its contractual obligations - there is no way to get to the bottom of it. It is stupid to blame Miller that he does not enter European exchanges with his product - Gazprom does not participate in speculation. To take part in the auction or not is his own business, no one can be forced here. Moreover, even without participating in the auction, he raises the rates, thereby increasing the profit of Gazprom. So, as you can see, following the results of eight months, everything is okay with the Russian monopolist! Miller may have problems this year only with holes for orders - there is no more room for them on his jacket.

The latest rise in prices on gas exchanges from the $ 800 mark and above (now they have already broken through the ceiling of $ 1100 per thousand cubic meters) has nothing to do with Gazprom at all (Miller was quite happy with $ 800). This is the work of already stock speculators who are bullish (we have a so-called bearish diversion). Specifically speculation on stock exchanges in various futures, forward contracts, derivatives, options, swaps and other speculative financial instruments that have nothing to do with real gas (since trading is made with “paper” gas, not actual gas), and led to such a jump in its price ... The sellers of this “paper” gas, trying to make money on the hype, are actually trading in the remnants of the gas pumped into the UGS by various residents, lowering its inventory there, which leads to an even greater price increase with limited replenishment of storage facilities by the main suppliers (including Gazprom). The launch of SP-2 may put an end to this, but prices will not fall much, because it is virtually impossible to eliminate the deficit in European UGS facilities of 23 billion cubic meters of gas (as recently stated by Miller, who, referring to international experts, said that this gap before the start the heating season can no longer catch up).

If the gas pipeline is not commissioned, 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 June, the whole process (if it is successful at all) can take up to 9 months (the countdown began on September 10, when the German regulator accepted the documents of Nord Stream 2 AG for consideration). 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 was scheduled for mid-October. So far, one thread "B". But, as we can see, due to the efforts of European bureaucrats, this date is shifted to the right. Gazprom, however, is in no hurry to go anywhere - the closer to winter, the higher gas prices. Miller is quite happy with this situation. Now Uncle Miller is only waiting for Santa Claus or, as they say in the West, Santa Claus. We will also wait.