Sunday

24th Oct 2021

Gazprom cuts gas to EU via Belarus by 70 percent

  • Gazprom executives and Russian diplomats said the firm was supplying EU customers in 'good faith' (Photo: gazprom.com)
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Russian firm Gazprom is continuing to reduce gas supplies to Europe via Belarus, potentially aggravating tense market conditions.

Exports to the EU via Belarus went down from 112 million cubic metres (mcm) on September 26 to just 30mcm on Sunday (3 October), according to Gazprom's latest data.

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That amounts to a 70 percent drop.

Deliveries directly from Russia and via Belarus to neighbouring Ukraine also fell from some 110mcm to 85mcm at the same time.

The new figures come after supplies via the Yamal pipeline, which runs from Russia via Belarus to Poland, fell by half last week.

Analysts, such as US investment bank Goldman Sachs, have said the Yamal cuts could lead to higher gas prices in winter.

And there was already a global crunch in gas markets, which has seen wholesale prices at the Dutch TTF - the premier global hub for gas-futures trading - surge to €113 per megawatt-hour - a price rise of 100 percent in less than a month.

Gazprom executives, such as deputy head Vitaly Markelov and export director Sergey Komlev, have spoken out in reassuring terms.

Markelov said at the St. Petersburg International Gas Forum on Tuesday that gas exports by Gazprom to Europe in 2021 will "continue to remain high", according to Russian news agency Tass.

"Accusations that Gazprom is not supplying gas to Europe are absurd," Komlev earlier told press.

The Kremlin has said Gazprom was ready to pump more gas if needed.

And Russian diplomats say Gazprom is supplying EU customers in "good faith".

But at the same time, some have accused Russia of tightening the screw in order to create political as well as market pressure.

Russia recently completed a new gas pipeline to Germany called Nord Stream 2.

It says it could pump an additional 5.6 billion cubic metres (bcm) of gas to the EU this year via Nord Stream 2 if it began immediately, but it wants to run the pipeline as its private monopoly.

The German regulator, the Bundesnetzagentur, said Tuesday Gazprom could be fined if it started pumping gas before becoming formally compliant with EU laws on "non-discriminatory network access" for competitors.

And Russia's falling EU gas supplies were a form of political blackmail on Nord Stream 2-approval for Olha Stefanishyna, Ukraine's deputy prime-minister, who recently said so in an EUobserver interview.

A group of 42 cross-party MEPs recently also complained that Gazprom was withholding gas.

And EU energy commissioner Kadri Simson told the Reuters news agency on Tuesday: "We are looking into this claim, together with [commission] executive vice-president [Margrethe] Vestager, who is responsible for competition rules, because it is, of course, a very serious matter".

She added that "our initial assessment suggests that Russia is fulfilling its long-term contracts".

But, speaking on a trip to Estonia and Finland the same day, European Commission president Ursula von der Leyen also told journalists that low supplies from Russia were a key cause of high prices.

"We are very grateful that Norway is stepping up its production, but this does not seem to be the case in Russia," she said in Finland.

The European Commission is to announce a new "toolbox" of recommendations how to handle the gas-price spike next week.

And EU leaders will discuss the creation of a new "strategic gas reserve" at a summit in Slovenia, which was meant to be dedicated to the Western Balkans, on Wednesday.

But in the long term, both von der Leyen and Simson said the EU should look to renewable energy-sources to cut dependence on volatile fossil-fuel suppliers.

"Renewables are good. We will be independent," von der Leyen said in Estonia.

"Ultimately, the solution is the same, whether it's about prices, security of supply, or climate: scaling up local, affordable, renewable energy is the way forward," Simson told Reuters.

Energy price spiral could harm EU recovery

Sky-high energy prices could undermine the EU's post-corona economic recovery, the EU Commission has warned, as EU states and MEPs called for joint action and fair play.

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