Earlier this month, Russia’s state gas giant Gazprom said It would have to stop the flow of gas over the Nord Stream 1 pipeline for additional maintenance work. The fear this announcement unleashed in European capitals, even as gas storage facilities are filling up ahead of time, speaks volumes about Europe’s predicament: there is no quick fix to dependence on Russian gas.
As Germany prepares for the disruption to gas supplies tomorrow, in Bulgaria – the poorest member of the EU – it was a few hundred people protest every day against the return of the Russian company as the country’s largest gas supplier.
According to the transitional government currently responsible for Bulgaria, this return is inevitable because there are simply no alternative suppliers. Protesters say US LNG and Azerbaijani gas can replace Russian pipeline gas.
According to available data on LNG demand in Europe, as quoted by government officials, the country would have to wait months for another LNG shipment as every available import terminal slot nearby is already booked. And the interconnector that is supposed to bring gas from Azerbaijan via Greece is not yet operational. Meanwhile, storage levels are critically low.
Bulgaria, according to some, was a test case for Gazprom to see how many European buyers would refuse to pay in rubles. They all did – initially. Now, according to the instructions of the European Commission, the payment is made according to the Russian conditions, but it is documented as having been made the moment the buyer sends the payment in euros or dollars to Gazprombank, which then converts the amount into rubles and sends them to Gazprom transfers.
This alone shows that Europe remains dependent on Russian gas and severe supply disruptions would likely end in chaos. The way there is paved with record high electricity prices.
According to Bloomberg, the day-ahead prices for electricity in Europe for this Monday were just under 660 euros per MWh in Germany and over 730 euros in France Javier Blas. The lowest price in the region was in Turkey at just over 182 euros per MWh. Two years ago, according to Blas, the typical electricity price in Europe was no more than 50 euros per MWh.
Then there was the case of The Hague, the Dutch city that houses the Court of Human Rights, which took place this month asked the European Union for a temporary exemption from anti-Russian sanctions because it had not found an alternative gas supplier in time. The Hague, authorities said, held a tender for gas suppliers in July, but no bidders showed up
Efforts to further reduce uptake of Russian gas continue, however, and the storage caverns’ fill rate is a sign of some success in this regard — some because this faster storage fill rate has resulted in a price 10 times higher than what Europe is charging usually pays to fill its gas caverns for the winter.
According to op ed In Politico, Europe is in the stronger position over the long term because it would further diversify its gas import sources, while Russia would find it difficult to diversify its customers given its much more modest pipeline network to the east.
The authors in Politico say this will give Europe leverage; however, it remains to be seen who Europe will put this pressure on, as it plans to completely stop buying Russian gas by 2030 or sooner.
But there will also be a price for this: not one, but several winters of energy shortages Minister of Energy of Belgium and the general manager by Shell. One can only hope that by then Bulgaria and Greece will finally have the infamous interconnector that will transport Azerbaijani gas to the heart of the Balkans operational.
By Irina Slav for Oilprice.com
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