All the contradictions of Europe on Russia and gas
The accusations against Russia and the increase in gas prices on the spot market seen by Demostenes Floros, senior energy economist of CER
Dmitry Peskov, the Kremlin spokesman, said recently it is not Russia that is causing the rise in natural gas prices in Europe, but trading on the spot market.
The International Energy Agency, an international organization that coordinates the energy policies of member countries, has asked Moscow to send larger quantities of natural gas to Europe to alleviate the energy crisis: gas prices have risen by 280 percent this year, and storage levels ahead of the cold season are low.
WHAT PESKOV SAID
European countries, Peskov said, “prefer to focus on spot supplies, on the spot market. It is exactly the spot market that leads to these leaps, such as this rampant price increase ”. More than the spot market – the one that provides for an immediate gas sale – Russia and the state-owned energy company Gazprom would prefer Europe to sign long-term supply contracts.
RUSSIA AND THE SPOT MARKET
Yet the spot market is not a disadvantage for Russia. This was explained to Start Magazine by Demostenes Floros, Senior Energy Economist of the Centro Europa Ricerche (CER), head of the monthly Column of the Petroleum Market and Geopolitics of Energy and head of the 10th course of Geopolitics at the Open University of Imola. He is the author of War and Peace of Energy. Italy's natural gas strategy between the Russian Federation and NATO .
"In a spot market", Floros said, "with 2/3 large suppliers, where Gazprom covers over 40 per cent of EU supplies, whose domestic production has been steadily decreasing for years, international tensions have they will immediately reflect on natural gas which – I would like to recall – will act as a bridge between the era of fossil fuels and that of renewables ”.
GAS AND ENERGY TRANSITION
“Furthermore, the energy transition will not only entail a significant increase in costs, which today are almost entirely passed on to the labor factor, but it is by no means certain that it will take place peacefully. In this regard, "adds the analyst," I would like to quote the words spoken by US Secretary of State Anthony Blinken last April: [if Washington does not increase green investments], "America will lose the opportunity to shape the climate future of the world, in a way that reflects our interests and values ”.
ACCUSATIONS TO RUSSIA
There are many voices accusing Gazprom, which has a monopoly on the export of gas via pipelines, of limiting its sales to Europe, contributing to the increase in prices. About forty European politicians have asked the European Commission to investigate the impact of Gazprom's practices on the gas market.
On this point, Floros highlights a logical contradiction between the Europeans and the Americans, who look with concern at the influence of Moscow on the Old Continent. “If the Russians supply us with large quantities of gas”, he says, “then our energy security is at risk, because we are too 'blackmailed' by Moscow. If, on the other hand, ”he continues,“ the Russians do not supply us with all the gas we need, then they are blackmailing us anyway, either on gas pipelines, or speculating on prices. It doesn't seem like a serious way of reasoning, let them come to an agreement ”.
WHAT GAZPROM DOES
“In the first 8 and a half months of 2021, Gazprom produced 357.7 Gm3 of natural gas (+ 17.8% year on year, equal to 53.9 Gm3)”, Floros reconstructs.
"At the same time, Russian gas exports outside the former USSR reached 138.6 Gm3, close to the record of 141.3 Gm3 set in 2018 (+17.4 Gm3 year on year, equal to 20.6 Gm3). This was possible despite the fact that supplies to China through the Power of Siberia gas pipeline active since December 2019 have also increased in the meantime (to be precise, regularly exceeding the daily amount contracted). Specifically, in the first 8 months of 2021, they reached 6.4 Gm3 (+ 270% year on year).
“Everything can be said”, Floros concludes, “except that the Russians have 'short arm', as they say in my part of the world. The truth is another: those who criticize Moscow today are the same who yesterday shouted in favor of the spot in a totally uncritical way. And the worst, I fear, is there to come ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/prezzi-gas-russia-europa/ on Sun, 26 Sep 2021 06:26:18 +0000.