2nd Mar 2024

Russia blames Western sanctions for EU gas supply problems

  • '[Vladimir] Putin is using energy as a weapon by cutting supply and manipulating our energy markets,' said European Commission president Ursula von der Leyen on Monday (Photo:
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Moscow has said Western sanctions are causing the problems preventing the restoration of gas flows via Nord Stream 1, the major supply pipeline connecting Russia and Europe via the Baltic Sea.

"Problems with gas supply arose because of the sanctions imposed on our country by Western states, including Germany and Britain," Kremlin spokesman Dmitry Peskov said on Monday (5 September).

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The gas pipeline, which was expected to resume operations over the weekend, was shut down indefinitely on Friday after an oil leak was found.

Peskov said sanctions are "causing chaos" and complicating maintenance work on the Nord Stream 1. "There are no other reasons that lead to problems with supplies", he said.

Earlier this summer, Russian state-controlled energy giant Gazprom also cut gas flows for 10 days of repair work — raising fears that Russia could further curb gas flows to the region or cut off supplies completely.

Germany's economy minister Robert Habeck recently said that his country cannot rely on gas supplies from Russia this winter.

Nevertheless, managing to refill Germany's gas-storage facilities to 95 capacity by 1 November would still only cover a maximum of 2.5 months of the country's heating and power demand, if Russia closes the gas tap, according to German regulators.

And the new cut-off is also putting at risk Germany's gas storage plans for this winter, Bloomberg reports.

Gas prices recorded a new surge on Monday as traders reacted to Russia's decision to keep Nord Stream 1 closed. The average gas price reached almost €290 per megawatt-hour (MWh) when markets opened.

"Putin is using energy as a weapon by cutting supply and manipulating our energy markets," said European Commission president Ursula von der Leyen on Monday.

Friday's crunch EU meeting

EU energy ministers will discuss this Friday various measures to tackle high energy prices, including price caps on energy, reduction-demand targets, and windfall taxes on profits from high energy gas prices.

The energy crisis, meanwhile, keeps filling the Kremlin's coffers as soaring prices boost Russia's earnings from energy exports.

Russia has made more than €158bn in revenues from oil, gas and coal exports since the war started in late February, according to an analysis from the Centre for Research on Energy and Clean Air (CREA) published on Tuesday.

The EU has been the largest importer of Russian energy since the invasion of Ukraine started, with imports accounting for over €84bn.

The 27-nations bloc is followed by China (€35bn), Turkey (€11bn), India (€7bn) and South Korea (€2bn).

Within the EU, the biggest buyers of Russian gas were Germany (€19bn), Netherlands (€11.1bn), Italy (€8.6bn) and Poland (€7.4bn) — followers by France (€5.5bn), Bulgaria (€5.2bn), Belgium (€4.5bn) and Spain (€3.3bn). 

"To combat this [record-breaking revenues], governments need to impose tariffs or price caps on imports from Russia and accelerate energy-saving measures," said Lauri Myllyvirta, lead analyst at CREA and one of the authors of the report. 

Myllyvirta argues that reducing oil and gas consumption should be given priority, raising investments and accelerating the deployment of heat pumps and electric vehicles.

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