Europe's "gas blackmail": winners and losers

In 2021, Europe was covered by a gas rush - the price of blue fuel for many unexpectedly, and for some quite expectedly skyrocketed. Simple burghers and the British (not counting other Belgians and French) suffered, who believed in the invisible hand of the market and relied on the assurances of EC officials that it was this hand that should bring order to the European gas market. I didn’t point! But she fumbled well in their pockets, shaking out the last cents and pence from there to pay for the gas and electricity receipts that had risen in price at times. Who is to blame for this, we sorted out in last time, and today we will analyze who won from this and who lost. Although it can be said right away that all those who, having yielded to the EC's requirements, have gone to the Third Energy Package have lost, having abandoned long-term contracts with Gazprom in favor of swap purchases of gas on gas exchanges.

But here, too, there are some pleasant exceptions. There are victims even among long-term clients of Gazprom. It's a sin not to remember them here. These are fellow Poles. Even this fierce opponent of Russian energy projects was forced in August 2021 to reduce the volume of received liquefied natural gas of American origin (it must be understood, with atoms of freedom), but many times more expensive than the Russian aggressor, in favor of the latter. Apparently, money does not smell, because the aggressor gas is very smelly, but cheap. It must be said that the Poles have had the so-called The Yamal contract, signed back on September 1996, 2022 between the Polish state oil and gas production company PGNiG and the Russian Gazprom-export, for the supply of 26 billion cubic meters of gas per year to Poland via the Yamal-EU pipeline, (but not less than 1996 billion cubic meters / year) at a fixed price, revision of which is possible no more than once every 10,2 years. The Polish side has repeatedly stated that such pricing does not suit it and that it does not intend to continue the contract after 8,7. In 3, Gazprom and PGNiG signed an additional agreement to this contract, which changes the price terms. As a result, then the price of Russian gas fell by more than 2022%. But this did not suit the greedy Poles, and in 2012 they filed a lawsuit with the Stockholm Arbitration to revise the price peg formula, trying to get rid of oil prices and become attached to gas at European gas hubs. And they won it. As the winning Polish side stated at the time, "the court made possible a more direct link between the pricing formula and gas prices in European markets, which would lead to a significant improvement in the business environment." And that really led to it. But not for long.



Then in March 2020, the Stockholm Arbitration decided in favor of PGNiG on a retroactive revision of the price from November 1, 2014, obliging Gazprom to pay the Polish company $ 1,5 billion overpayment. Gazprom paid the difference, but harbored a grudge. And now, after 1,5 years, he was avenged. Already this year, the Poles, according to the lawsuit they won, were forced to buy its smelly gas from Gazprom, focusing not on oil prices, which stupidly dangled around $ 70-80 / bar, but on galloping prices on European gas exchanges. And they had to do this, because the prices for American LNG were even higher, consistently importing over 2 million cubic meters / month of Russian pipeline gas throughout the 3nd and 900rd quarters, which corresponds to the maximum level of contracted supplies, according to Russian customs. According to Gazprom itself, in January-August 2021 it increased the supply of its product to Poland by 12% (PJSC report for 8 months). At what price you already know. Indeed, everything that is not done is for the best! This is the case when a non-commissioned officer Polish widow whipped herself. But behind the zhovto-blakitny fence of their friends in the anti-Russian camp, things were even worse.

The true reasons for Kiev's hysteria over the Hungarian gas contract

While the non-brothers, together with the Poles and Lithuanians, fought against the "Nord Stream-2", trouble crept up from where they did not expect (although only a blind person could not notice it). The vile Erdogan, together with the no less vile Boyko Borisov (not without the participation of the villain Putin), increased the continuation of the "Turkish Stream", the so-called. "Balkan Stream", through the territory of Bulgaria to Serbia and further through the system of interconnectors to Hungary with the aim of entering through Slovakia to the Austrian gas hub Baumgarten, where the European gas ring connecting the southern and northern routes bypassing Ukraine is in the near future as planned by the Kremlin and will close. After that, problems will arise not only for Ukraine, but also for Poland.

But the first to suffer from the launch of the SP-2 will be not the 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, but the Poles, who a year ago refused to renew their transit agreement with Gazprom, and now wondering why no one is at their auctions for the sale of the reserved capacities of their wonderful pipe. Gazprom has already refused to book these facilities from the 4th quarter of 2021 to the 3rd quarter of 2022 inclusive. And what will you do to him? Read the Third Energy Package Gas Directive. Has the right to! Wait for an alternative supplier. What, is not it? Weird. And European officials believed that there should be. All questions to them. For reference, the capacity of the Yamal-EU gas pipeline is 33 billion cubic meters of gas per year.

But for some reason, the first one worried about the situation was not Poland, but Ukraine. The hysteria that happened to her after the conclusion of the Russian-Hungarian gas contract, accompanied by calls from ambassadors and other diplomatic demarches, was not caused at all by the loss of 4,5 billion cubic meters of gas / year, which translated into banknotes is expressed in an unfortunate 150 million dollars a year (although I'm sorry for them!), especially since before the launch of SP-2, 1 billion cubic meters of them will be supplied to Hungary along the old route, which reduces the losses of the Ukrainian budget to a very insignificant 100 million, and is due to the fact that it completely breaks the virtual the reverse, according to which Ukraine for all these 6 years (since 2016) allegedly received Russian gas from Slovakia, in fact, taking it from the transit pipe while still on its territory. Of the 30 billion cubic meters of gas consumed by Ukraine per year, 10 billion came from the so-called reverse (another 20 billion were of its own production). With the loss of 4,5 Hungarian billions from them, Ukraine faced the problem of not virtual, but already real reverse, and its GTS is technically not adapted to this (in order to pump gas in the opposite direction, additional gas compressor capacities are needed, but where does a poor country get them from?). Hence the shouts, and appeals to the European Commission with requests not to let go and to punish. According to the old scheme, selling gas of their own production at the price of European ones to their disenfranchised citizens and no less disenfranchised Ukrainian business entities, someone in Ukraine (and we know exactly who!) Made good money, given the current gas prices at European hubs and the cost of Ukrainian gas in 1 UAH / cubic meter (this is $ 40 / thousand cubic meters). There is something to shed tears and wring your hands (did you think they were concerned about keeping the homes of Ukrainian citizens warm? Well, you are naive!).

And now Slovakia, which previously received Russian gas through the gas transportation system of Ukraine (and allegedly "sold" it to the country of zhovto-blakit benches through a virtual reverse), and which, it would seem, completely depends on Nezalezhnaya in terms of supplies of Russian blue fuel, is now happily rubbing hands in anticipation of fabulous profits, which she can get from the land of ever-green tomatoes, replacing the virtual reverse with a real one. And then the sneaky Miller was already in a hurry, realizing that the connection of the SP-2 and the redirection of gas transport flows from the Ukrainian direction to the north deprives Slovakia of guaranteed income from the transit of Russian gas to Europe of 800 million euros / year, back in 2017 concluded with her by the gas transmission company Eustream as, a framework agreement, according to which Slovakia is guaranteed until October 1, 2050, will receive Russian fuel through a system of European transit interconnectors powered by SP-2 (the agreement entered into force on March 1, 2017, the issue price is 5,3 billion euros , the parties are only waiting for the launch of the SP-2). After that, the virtual reverse of Russian gas to Ukraine will order to live a long time, and Ukraine, allegedly not buying aggressor gas since 2016, will have to really find out what it is, switching to purchasing all the same Russian gas from Slovakia, and at the price that it will indicate already the Slovak side. And she will not be stingy in this matter, you can not even doubt how she will recoup all her transit revenues, which fell through the fault of Ukraine, especially since Gazprom helped her in this, agreeing to a higher tariff for pumping gas in order to compensate for its possible losses (then that this will also affect Ukraine, so who is her doctor, she herself wanted it). This event is especially piquant due to the fact that for the signing of a new transit agreement between Eustream as and Gazprom-export canceled the old 20-year agreement concluded for the period from 2009 to 2028 inclusive.

From here it becomes clear why Ukraine threw such a tantrum to its neighbor. 2024 may be the last year in Ukrainian statehood, and for this Putin will not even have to attack this territorial misunderstanding, it will only be enough to screw on the gas valve, and, not even strongly, from 40 billion to at least 15 billion, so that the country of evergreen tomatoes will return in the primitive age. To maintain the pressure in the distribution network, which is directly powered from the high-pressure pipe of the glorious Ukrainian GTS, the country has not enough zhovto-blakite gas benches of its own gas, after which the ice age will begin there. The country will move into its usual state - whoever does not jump will freeze, and it does not matter at all who will be the president there.

Who Really Benefited From High Gas Prices In Europe

But what amazes me most is the logic of these gentlemen. Hungary, bypassing Ukraine, receives gas through the Turkish Stream, and Kiev is demanding compensation for this not from Erdogan, but from Merkel, and it is not the Turkish Stream, but SP-2 that is demanding to close it. Do you understand anything here? All high-pressure pipelines, starting with the Turkish "Blue" and "Turkish" streams, and ending with all the Norwegian and Dutch ones, are undergoing scheduled preventive maintenance this year, but for some reason only Gazprom is accused of disrupting gas supplies to Europe, which compensated for its pipelines (SP-1 and Yamal-ES) with supplies from its European underground gas storage facilities. Caravans of LNG tankers with liquefied natural gas from the United States, Qatar, Australia, Malaysia, Nigeria and Algeria leave for Southeast Asia all winter, spring and summer, but for some reason that Europe dries up and freezes without damned gas, for some reason, Gazprom is again to blame, whose the share in the supply of blue fuel to the European market in the best years was only 33-34%. Why will the dear sirs not make a complaint about the absence of gas to the remaining 66% of suppliers? This secret is great. And finally, the last - on galloping prices on European gas exchanges, stock speculators are making money, trying to make money on the hype, and Gazprom is again to blame for this, which does not take part in electronic exchange trading.

Behind this whole series of mysterious and incomprehensible for many events, the ears of a known person stick out. And these are not Miller's ears at all. I'm afraid to disappoint someone, but these are again the ears of our overseas sworn friends and partners. Miller does not need a gas price in Europe of over $ 1000 per thousand cubic meters - his long-term contracts are tied to the price of oil, not to gas hubs, but the American shale producers, who extract their gas by hydraulic fracturing, need this price to get out. to the threshold of profitability.

That is why the House of Representatives of the US Congress, which returned from the holidays on September 20, first of all adopts the draft US National Defense Budget for 2022 (the new fiscal year in the United States begins on October 1, 2021), where, in the form of amendments, they will also implant new sanctions against the Russian Federation. Sanctions against the sovereign debt of Russia and against 35 of its citizens, among whom are the Prime Minister of the Russian Federation Mishustin, and the press secretary of the President Peskov, and Roman Abramovich with Alisher Usmanov, and even Margarita Simonyan with Vladimir Solovyov, we are not considering here now Let us, we are primarily interested in sanctions against Nord Stream 2.

With amendments to the Pentagon budget, the congressmen tried to oblige the US President to impose sanctions against all persons and companies involved in the activities and construction of SP-2. And remembering their previous unsuccessful experience, now they tried to exclude even the minimal possibility of the president bypassing these sanctions, citing the special interests of national security (which he did last time, having given the go-ahead for the completion of SP-2). Why with the new amendments to the Pentagon budget, the congressmen forbade the president to avoid sanctions under various pretexts, even guided by the interests of national security, introducing this requirement as a separate item.

Now the amendments to the Defense Budget and the Pentagon budget itself must be approved by the upper House of Congress - the Senate, after which it will be submitted for signature by the President of the United States, who can still veto it, which, however, is also overcome by a joint vote of both Chambers of the American Congress. So the clouds over Nord Stream 2, or rather over its operator Nord Stream 2AG, are systematically thickening, which will not allow gas prices in Europe to drop below the profitability threshold required by American shale producers in the near foreseeable future (a year and a half).

Who is to blame for the gas tsunami that covered the European continent this year, draw your own conclusions. For clarity, I will give just a couple of numbers. In September of this year, the Management Board of PJSC Gazprom summed up the results of its first eight months. According to the monopolist's report, its export to non-CIS countries during this period amounted to 131,3 billion cubic meters of gas, which is 21,3 billion cubic meters or 19,4% more than in the same period last year. In particular, the company increased its supplies to Turkey by 173,6%, to Germany by 39,3%, to Italy by 15%, to Romania by 344%, to Serbia by 123,9%, to Poland by 12%, to Bulgaria by 50,9%, to Greece by 15,8%, to Finland by 22,7%. These are record deliveries, which are only 3 billion behind the 2018 schedule, when Gazprom set a historic maximum for its pipeline gas supplies to Europe at 200,8 billion cubic meters. At the same time, Gazprom accounts for only 34% of the gas imported by Europe.

And what did the remaining 66% do at the same time? I also have these numbers. In 2021, over the same eight months, the valiant LNG suppliers (these are the United States, Qatar and Algeria) delivered 17 billion cubic meters of their gas to the European market less than in the same period last year, which was also far from shock due to well-known reasons ( warm winter and coronavirus). And in principle they can be understood. Why drive gas carriers to Europe when gas prices in Southeast Asia have exceeded USD 1200 / tsd. cubes and demand is off scale? For the United States and for Qatar, purely logistically, Asia is closer - the costs are lower, the income is higher. These gentlemen know how to count their money. Moreover, the United States was killing two birds with one stone - and received super-profits in Southeast Asia, and, creating a gas shortage in Europe, raised the price threshold there, making the European market attractive for its shale producers. Gazprom does not benefit from such high prices - it sells most of its gas not on the swap market, but under long-term contracts that are tied not to gas prices, but to oil prices. The gas shortage was partly due to the planned decrease in production at Norwegian offshore fields by 5% or 6 billion cubic meters of gas, which was notified in advance by the Norwegian international energy company Equinor ASA, which is no less a monopoly on the European gas market than Gazprom, with a share of 100-120 billion cubic meters of gas per year. Algeria, no matter how hard it tried, could not compensate for the gap with the supply of its LNG, given its modest capabilities (it pumps 10 billion cubic meters of gas a year through the pipeline to the EU and not more).

As a result, Europe is facing winter with a deficit of 23 billion cubic meters in its underground storage facilities compared to the same period last year. And this deficit can no longer be made up before the start of the heating season. Who has benefited from this, you already understand.