Russia pushes for gas pipeline to Europe, secretly threatens to cut off supply

(Chicago, special for Infobae) – A very cold draft from the East hits Europe. It is not caused by a meteorological phenomenon. He is the icy breath of Russian influence that is felt from Berlin to Lisbon each time winter approaches and the face of the energy crisis emerges more clearly. Russia supplies 43% of the natural gas consumed in Europe. Gas prices have skyrocketed in recent weeks and threaten to slow industrial activity, increase inflation and leave many people without heat in what is expected to be a colder-than-normal season. A perfect storm created by various factors ranging from the controversial construction of a new gas pipeline under the Baltic Sea, the dispute between Russia and the United States for influence in European affairs, the low production of gas on the continent itself and the punishment that the Kremlin wants to continue to impose on Ukraine for its rebellion.

Natural gas prices in Europe shot up again early Wednesday to trade near 10 times your level at the start of the year. UK gas contracts for November delivery rose nearly 40% as markets opened to over £ 4 per therm (2.83 cubic meters), having started the year below 50 cents. Russian President Vladimir Putin had to leave to ensure Europe’s gas supply will increase. This has calmed the markets for the time being and the price has returned to 2.87 pounds. A hand that the Kremlin doesn’t give away for free, of course. Behind it all is pressure for the European Union to finish approving the operation of the Nord Stream 2 gas pipeline, which avoids having to go through Ukraine to send gas to Germany. Putin is secretly threatening to shut off the supply tap if that doesn’t happen.

Energy market “brokers” claim that one of the main reasons for the price increase is that Russia limits gas supplies to Europe. Putin denied this, saying Gazprom already exceeds its contractual obligations by “more than 8%”. He also noted that it was “economically disadvantageous” for Gazprom to send the gas through Ukraine. And he blamed the price hike on the switch to renewable energy sources in Europe and he said it was a “mistake” to move away from Russian gas.

Ukraine and other Eastern European countries accuse Moscow of try to “militarize” the gas supply. In exchange, Germany defends the agreement. In July, Angela Merkel and US President Joe Biden signed a pact whereby Washington agreed to the completion of the Nord Stream 2 pipeline in exchange for the indispensable supply of Ukrainians is guaranteed. Moscow assures that it will respect the agreement with Ukraine, although few believe in it. Kremlin spokesman Dmitry Peskov said on Wednesday that “There is absolutely no role for Russia in what is happening on the gas market”. But the truth is, Russia this week inaugurated another alternative gas pipeline that carries the fluid to Hungary without going through Ukraine.

Record natural gas prices are a symptom of the global battle to secure fuel supplies after demand will rebound rapidly from the depths of the pandemic. The price of coal, which is still used to generate electricity and for heating despite its environmental consequences, has also surpassed its all-time high of 2008. “There is an anticipated energy crisis underway. The cuts have not yet taken place and winter has not started, and the markets have reacted very negatively. There are fears that if the new gas pipeline does not work next month, Putin will apply pressure by turning off the tapStephen Brennock of PVM, an energy brokerage firm in London, told the Financial Times.

Domestic gas production in Europe has declined dramatically, while demand in Asia is increasing as countries increasingly seek alternatives to highly polluting coal, creating a bidding war for liquefied natural gas shipments. The UK is the country most vulnerable to record gas prices in Europe because its storage capacity is very limited, making it dependent on a coordinated system of domestic production and imports of gas pipelines and sea freight. The vast majority of UK homes are heated with natural gas. The phenomenon was strongly accentuated with the closure of coal-fired power stations and wind power only produces 50% of all electricity. The pandemic has done the rest and is affecting the entire planet. China last week ordered its state energy companies to secure supplies for this winter at all costswhile India is looking to the thermal coal export market to replenish stocks which are approaching extremely low levels. “It’s not really about pricing anymore,” Dmitry Popov, analyst at CRU, a commodities consultancy, told the BBC. “It’s about securing the supply for the next few weeks or months.”

In the meantime, everything now seems to depend on the Nord Stream 2 which ended a few days ago when the Russian pipelayer Fortuna sealed the last stretch off the Danish island of Bornholm. The project has been controversial since its inception in 2015, when Russian state-controlled gas giant Gazprom and five European energy companies signed a consortium to build a new line to replace the lower capacity Nord Stream 1 in the bed of the Baltic Sea. . The Nord Stream 2, with a cost of 9.5 billion euros (financed half by Russia and half by European investors), was forged when the Social Democrat Gerhard Schröder left the German Chancellery and became an advisor to Gazprom. The new gas pipeline will now allow the Russian giant deliver 55,000 million cubic meters of gas to Europe each year through 2,460 kilometers of pipelines that cover more than 1,200 kilometers from Ust-Luga in Russia to Lubmin – a small town very close to the town of Greifswald – in Germany.

But for all of this to happen, some final bureaucratic aspects in the European Union still need to be overcome and Moscow to achieve sufficient production to comply with the agreements. Until then, freezing storms will continue to hit the markets, prices will continue to rise and fall and Northern Europeans will be left unsure of facing a winter without heating in the shadow of a new wave of pandemic.

KEEP READING: