Article: Why the EU needs Russian energy giant Gazprom
Angle:
“Gazprom uses its market power by influencing prices through the amount of gas that it supplies to Europe,” energy expert Georg Zachmann from the Brussels-based Bruegel think tank told DW.”
Reasoning:
“There is a kind of competition between the European regulators who are trying to create a market with unified prices and Gazprom which is trying to impose different prices in different countries,” explained Zachmann.
While Gazprom insists that it has honored all its long-term supply commitments, Zachmann said that the company was actually supplying less gas to the market with short-term contracts.
Zachmann said that the short-term market had become increasingly important in recent years because there was an attempt to become less dependent on Gazprom in the long run.
So, that Gazprom and with it russia doesnt want to rely on short term contracting, because it encompasses an attempt to become less dependant on Gazprom overall is… wait for it…
“Gazprom is fulfilling its contracts, that is true, but only at the lowest level of its commitments,” European Commission President Ursula von der Leyen pointed out recently. She said that other suppliers had increased their deliveries in view of the rapidly rising demand and record prices.
Von der Leyen added that Gazprom was behaving in a strange way, considering that more gas was not being supplied despite high demand. She also told the German daily Handelsblatt that the fact that the company belonged to the Russian state raised doubts as to its reliability.
STRANGE BEHAVIOR considering that not more gas was supplied, given the high demand.
But Gazprom is fulfilling its contracts, thats true.
But this is all raising doubts, because relying on the Russian state raises doubts on reliability overall.
But Gazprom is fulfilling contracts.
Yes, but we expected more than just fulfilling contracts.
While threatening sanctions at the same time.
edit: Short interlude, to dilute the hate in this posting with a little bit of comedy.
And then, when german suppliers finally put in a bigger order a few days ago, Gazprom reports, that capacity on the Ukraine pipeline was booked within a day, and delivery started within a day or two…
But its strange behavior, that it wasn’t more, before that happened.
Because Gazprom was just fulfilling their contracts.
Because of this excellent effing logic, and certainly not because of any alterior motives, UvdL announced the following in the same Interview with the “Handelsblatt”.
If Gazprom were to receive instructions from the Kremlin to stop supplying gas to the EU, there could be significant shortages.
Von der Leyen said that she did not believe it would come to that. Since the Russian economy is so dependent on energy exports, it would not make sense to jeopardize its relationship with its biggest client and investor.
But she told Handelsblatt that the EU and the US were working to increase supplies of liquefied natural gas from Qatar or the US. Negotiations are to take place this coming Monday in Washington DC.
So because we dont believe, that Russia would cause significant shortages of gas supplies in Europe out of their own volition, basically because of the entire economic design of the venture to begin with, the EU now has to work with the US to increase supplies of LNG from Qatar, or the US.
AM I GOING INSANE, OR IS IT THE WORLD AROUND ME?
edit: Bloomberg article has more details:
Traders are watching every move by Europe’s top supplier, focusing on how much gas is delivered beyond contracted volumes. Auctions of pipeline capacity for December run next Monday, which will cast a light on whether extra shipments could materialize. Additional bookings may be likely if Gazprom sees progress in the certification of the contentious Nord Stream 2 pipeline, analysts have said.
News article was from November 10th 2021. That was after Gazprom booked pipeline capacity over Ukraine to deliver according to contract obligations.
So lets summerize. Because Europe moved away from long term procurement deals, endangering energy security, while Germany set into action plans to exit from coal and nuclear energy simultaneously, and stopped North Stream 2, on the political level, because of U.S. intervention at the licensing stage, Gazprom stopped to supply spot markets with (by then more expensive) natural gas - at “expected volumes”, expected, because it was the intended goal of the EU to decrease energy dependency on russia, so they went into day trading it in larger volumes, and spot markets instead -- which now has caused UvdL to anounce, that this would have been “strange behavior” of Gazprom - that they didnt just supply the daytrading sector with the same amount as before, and thereby causing questions over russian reliability in the energy procurement sector - while at the same time stating, that the russian economy would falter, if they ever did so (at any extent that would endanger EU energy security), and that it wasnt very likely -- and because of that, its now in the interest of energy supply stability to diversify procurement, and go with LNG from the US or Qatar (who knows, certainly not UvdL), which needs an extension of the LNG infrastructure within the EU, which the EU is backing, but which is usually privately funded (with investment guarantees given out), and only just became interesting for investors in the sector, because of rising gas prices. Oh and that on its own (diversification) will raise effective procurement prices. Also slowing down the sustainable energy transition - which still is the main project of the UvdL presidency, apparently.
No - checks out. Why should journalism report anything else. Or ask any questions.
Oh, and btw. the LNG industry has a new leading exporting nation.
Oh, and the singular cause for higher US natural gas prices was “the arctic cold snap”, of course.
Theres good news in all this as well, of course -
Goldman: Ukraine Conflict Could Double EU Natural Gas Prices
WAIT THE UKRAINE CONFLICT? I THOUGHT IT WAS RUSSIAS UNRELIABILITY ON THE SPOTMARKETS! (Because if it wasnt, it would have been EU threats of sanctions, playing a major role, surely…)
AM I GOING INSANE, OR IS IT THE WORLD AROUND ME? (Sh*t they are lying to us!™)
