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Aug 4, 2022
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From bad to worse: Bank of America warned Europe – there will be no good news for you from Gazprom for a long time

From bad to worse: Bank of America warned Europe - there will be no good news for you from Gazprom for a long time

Photo: Nikolai Gyngazov/Global Look Press

“The gas situation in Europe is rapidly changing from a ‘bad’ to a ‘terrible’ scenario,” Business Insider said in a report, citing Bank of America.

It is noted that Russia first shocked the energy markets by launching a special operation in Ukraine, and then shocked Europe by cutting off gas supplies: at the end of July, Gazprom reduced supplies via the Nord Stream 1 gas pipeline to 20%, and before that it completely stopped gas pumping for a 10-day maintenance period. Recall that both strings of the gas pipeline were stopped for 10 days for annual scheduled preventive maintenance, including testing of mechanical components and automation systems.

Gas was supplied to Western and Central Europe through only one branch – through Ukraine. Europe then panicked a little, in particular, Germany suggested that, under the pretext of maintenance, Russia would stop gas supplies altogether. And the Europeans have finally realized that Russia is the largest supplier of energy for their consumption. Russian supplies account for 40% of all gas consumed in Europe – this is not a bug you sneezed.

And it is already clear that if Nord Stream operates at 20% of its capacity, then the reserves that can be made for the winter, alas, will not be enough.

Now Europe is starting to frantically save money: in some German cities, the illumination of historical monuments and buildings is turned off, the Warsaw City Hall proposes to abandon Christmas illumination, a request from the European Commissioner for Competition Margret Vestager minimizing showering to reduce energy consumption for heating water has become a byword since mid-spring. Another Deputy Minister of the Environment of the German state of Baden-Württemberg Andre Bauman called for sorting garbage and producing natural gas from biological waste to reduce Germany’s dependence on Russian gas.

And some EU countries have already developed a plan to reduce its consumption. But these measures, apparently, are like a pellet to an elephant. On August 2, the price of gas in Europe exceeded $2,200 per thousand cubic meters. According to data from the London Stock Exchange ICE, since the start of trading, the price has risen by 4%. True, in July gas was also more expensive, the price rose to $2,300.

“As Russian supply pessimism grows, European natural gas spot and forward prices are moving into a higher range,” Bank of America said in a statement.

And, apparently to tame the fear, analysts conclude that “Russia’s gas lever is weakening, so Russia may decide to use it before it loses it.”

Expert Vadim Trukhachev believes that the European countries themselves created this problem for themselves, and the United States also provoked them, in their own interests, of course.

– Energy problems began last year, when Europe decided to speed up the “green transition”. At the same time, purchases of Russian gas decreased. And this happened until February 24th. So the current state of affairs took shape before the start of the special operation in Ukraine and the introduction of anti-Russian sanctions. They only made it worse.

The publication in Business Insider thickens the paint a little, but the situation is really difficult. And in all countries without exception. Even in oil and gas producing Norway. You can’t imagine this, and you can’t explain it with horror stories of opponents Annalena Burbock or girls Greta.

The United States has its own benefit – to sell its expensive LNG to Europe, displacing pipeline Russian gas. And there are various arguments for this. Another thing is that things are not going very well in the United States itself, since there, following Europe, they also started a “green transition”.

Is it possible that the current $2,200 is a purely speculative price? And all the accusations against Gazprom are just a cover?

No one will say this, because it is very debatable. This is the exchange price, here the risks are also calculated. And they calculate them according to the principle “who is in what much,” explained Sergei Pravosudov, head of the National Energy Institute.

— Last autumn, European traders decided that there was little gas in storage, and if there was a cold winter, it might not be enough. And prices skyrocketed. The winter turned out to be warm, there was enough gas, but prices remained high. And then a special operation began, and they flew even higher. But here we must understand that Russian supplies are reduced not because Gazprom is strangling Europe, but because of the unfriendly steps of Europe itself, to which Gazprom is forced to respond.

The first step was to take control of Gazprom-Germany. Of course, Gazprom stopped fulfilling the contracts. This is no longer his company, it was actually taken away. And these are contracts for the supply to the market of a number of European countries, and for filling storage facilities. Then “Yamal – Europe”, the Polish authorities actually nationalized their site.

There was also a story with paying for gas in rubles, some countries agreed to this scheme, some did not. And what about Nord Stream 2, which they refused to ratify and the project did not work? Then the Nord Stream 1 story began, when Siemens refused to fulfill its delivery obligations related to the turbine, which was being repaired in Canada. Gazprom reacts to external stimuli. There is no political will, only business.

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