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Aug 3, 2022
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Europe fears a cold winter

There is growing fear in Europe that natural gas shortages will force countries to ration fuel consumption and companies to shut down their factories. The mood of business, the public and even municipalities is expressed in a screaming slogan: “Return Russian gas!” Thus, business circles in Bulgaria are asking the authorities to resume supplies from our country, and the mayors of German cities are calling on Berlin to launch Nord Stream 2 to ensure energy security.

Deliveries to Bulgaria were suspended in April after the authorities refused to pay in rubles under the Gazprom scheme. As Sofia said at the time, the new two-stage payment procedure proposed by Russia does not comply with the agreement valid until the end of the year and poses “significant risks” for buyers.

As it turned out, the official position of the Balkan state does not coincide with the opinion of large consumers of blue fuel from among the country’s private entrepreneurs. Thus, the Association of Bulgarian Employers stated that the contract for the supply of American LNG by Sofia is not able to fully meet the demand for gas, the shortage of which will lead to higher prices, therefore, seven tankers with liquefied fuel, which will reach Bulgaria from the States from October this to April next year, will not save the national energy balance.

“And even if, in some surprising way, liquefied gas reaches Bulgaria, it will be 35–40% more expensive than raw materials under the contract with Gazprom Export. If forfeits are added, this gas will be three times more expensive, ”the association believes, warning of risks to the economy and energy supply as a result of“ unreasonable and nationally irresponsible actions.

The proximity of a cold winter, which will have to be experienced without Russian raw materials, is also felt by other members of the European Union. The mayors of seven cities in Germany sent a letter to Economy Minister Robert Habeck and Prime Minister Manuela Schwesig calling for a change in the state’s energy policy, including allowing the launch of the Nord Stream 2 gas pipeline.

“Bulgaria and Germany until recently depended on supplies from Russia in different ways: the first – by 100%, the second – by 75%,” says Artem Deev, head of the analytical department at Amarkets. — It is simply unrealistic to completely replace these volumes, both technically and from the point of view of the capabilities of other suppliers. For example, the United States promised to supply its own LNG, but Berlin does not have receiving regasification terminals: the construction of the first such facility started only in July. Bulgaria, due to the recently launched Interconnector pipeline from Greece, is able to quickly replace only 30% of Russian imports.”

In any case, these countries will feel the shortage of raw materials from Russia. Many companies in Europe are threatened with a halt in production. The general imbalance in the gas market leads to an increase in prices, which today (although the heating season has not begun) are at the level of late autumn 2021 – above $2,200 per thousand cubic meters.

“The Europeans’ concerns about a difficult winter are absolutely justified,” the expert argues. “In Slovakia, citizens stock up on firewood, in Poland there are paid lessons for the population on collecting deadwood.”

By the end of July, UGS facilities in Bulgaria were only 42-43% full, while those in Germany were 66-68% full,” says Alexey Fedorov, TeleTrade analyst. “This is not enough for a painless passage of the 2022-2023 heating season.”

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