Three events around gas supplies to Europe have taken place in recent days. Each of them, one way or another, can affect the gas market and Russian gas transit.
The Swiss court has suspended the bankruptcy proceedings of the operator of the Nord Stream 2 gas pipeline, Nord Stream 2 AG. This is reported by the media with reference to a document published on the website of the official trade bulletin of Switzerland.
As follows from the statement, the court, at the request of the company, issued Nord Stream 2 AG a temporary moratorium on the payment of loans for four months – from May 10 to September 10, 2022. Transliq AG has been appointed interim administrator.
Meanwhile, the Russian government on May 11 published a list of foreign companies subject to special economic measures. The list includes 31 companies that are former subsidiaries of Gazprom, including Gazprom Germania GmbH and Gazprom Marketing & Trading Ltd., as well as a joint venture between Gazprom and the Polish PGNiG, which is the operator of the Polish part of the Yamal-Europe gas pipeline .
With these companies, transactions involving the making of payments, transactions with securities with the participation and (or) in favor of persons under sanctions are prohibited. In addition, these companies are subject to restrictions from the presidential decree on retaliatory measures dated May 3, 2022 No. 252, in particular, it is forbidden to make transactions with legal entities, individuals and organizations under their control, in respect of which special measures are applied, as well as to carry out financial transactions, the beneficiaries of which are persons under sanctions.
In Germany, the decision of the Russian authorities was taken into account, but they are not ready to comment on it yet, since they do not know the details.
“We still have no information about the type of sanctions. The government and the Federal Network Agency, as a trustee of Gazprom Germania, are taking the necessary measures and are preparing for various scenarios, ”TASS quoted the regulator as saying.
Against the background of the adoption of landmark decisions, gas supplies to Europe through the Ukrainian GTS fell sharply. This is connected with the termination of gas transit by Ukraine through the Sohranivka station, allegedly due to force majeure. The Ukrainian operator rejects Gazprom’s applications for pumping gas through this point, offering to transit through the Sudzha GIS, but the Russian company said that this was impossible for technological reasons.
Ukraine is clearly exacerbating the situation, using the scheme already known to it with gas blackmail, primarily of Europe. At the same time, Europe itself, frantically imposing sanctions against Russia, has put itself in a difficult position.
“As long as nothing bad happens,” he says. Director of the National Energy Institute Sergey Pravosudov. — European companies are gradually switching to payments in rubles. Poland is a different story, it buys the same Russian gas, but through Germany.
There are still volumes of deliveries through Ukraine, but gas is not currently flowing through Sokhranivka. This suggests that they are gradually undermining the contract, which is valid until the end of 2024. It states that Gazprom, regardless of the actual volume of delivery, is obliged to pay for daily transit. And he paid in full. If Ukraine gradually abandons its transit obligations, I can assume that Gazprom may also abandon its own and pay only for the actually pumped gas.
“SP”: – It is clear that Europe may have problems in the event of a decrease in transit. Is the decision of the Swiss court an attempt to leave a loophole for Nord Stream 2?
– Do not confuse Nord Stream 2 AG and a pipe. The pipe can be owned by any company, it will not go anywhere if Nord Stream 2 goes bankrupt.
The problem is money. Bankruptcy means that someone cannot pay their debts. The construction of Nord Stream 2 was financed by European companies, this is about 5 billion. If the company goes bankrupt, where will the money, where will these debts go? Therefore, the topic was postponed until a decision is made by someone.
“SP”: – How, after all, will the bankruptcy of Nord Stream 2, if it happens, turn out for the pipe itself?
“It all depends on how it will be framed. Now there is a company and a pipe, there is a connection between them, then, probably, there will not be. But what to do with it, as well as with the money that was directed to its construction, is still unclear.
“SP”: – Is there a possibility that if something happens to the GTS, Europe will go to the launch of Nord Stream-2, albeit in special mode?
— The problem of the Ukrainian GTS has not disappeared, regardless of political events. It was built back in Soviet times and is already ineffective. Either someone has to invest in its modernization if we want it to continue to exist, or an alternative route must be involved.
There is a new pipe – environmentally friendly, based on new technologies, but not used for political reasons. These political reasons in no way solve the problem with the Ukrainian GTS. No one expressed a desire to modernize it.
“SP”: – While the issue is hanging, transit through Ukraine has already fallen. So, maybe Europe will decide to launch SP-2 if the situation worsens?
– Theoretically, they can, but they do not give a political solution.
Deputy Chief Director for Energy at the Institute of Energy and Finance (IEF) Aleksey Belogoryev So far, he does not see problems for Europe as a whole from the measures introduced by the Cabinet, but there are nuances.
— There are two components of sanctions. First: EuRoPol GAZ, which owns the Polish section of the Yamal-Europe gas pipeline. There could be risks for transportation through it, but the company Gaz-System, which provides gas transportation services, is not associated with EuRoPol GAZ. Most likely, “Gazprom” fully retains the possibility of using the “Yamal-Europe”.
The second part is sanctions against Gazprom Germania and its subsidiaries. Most of the “daughters” are trading companies that are engaged in the purchase and sale of gas, and not only Russian. Refusal to cooperate with these companies directly on European consumers will not affect.
More significant are the sanctions against the subsidiaries, which are responsible for gas supply, but they have contracts for the purchase of Russian gas and distribution mainly to Germany, the Czech Republic and Slovakia. These are not the key consumers of Gazprom in these countries, but some buyers will not receive this gas.
There are also subsidiaries that are responsible for underground storage facilities (mainly in Germany), which Gazprom used to store gas in the past and used to cover demand during the peak period. Last year, he pumped very little gas there. In general, Gazprom will lose a significant part of its flexibility in terms of supplies in the winter. However, given the reduction in gas consumption now and the availability of spare capacities, it will be able to compensate for this lack of flexibility through greater laundromat through gas pipelines.
I do not see any serious risks for the gas supply of European consumers, but reliability is generally reduced, especially during peak demand and if the winter is cold, especially in Germany.
“SP”: – Ukraine is now partially blocking the GTS. How will this affect supplies?
— Gazprom now has five large corridors: Nord Stream-1, which is usually loaded to the maximum, Turkish Stream, which Gazprom is also interested in loading to the maximum, Yamal-Europe and two corridors through Ukraine. The Ukrainian operator said that it would not take into account the volumes through Sokhranivka and recommended sending through Sudzha, where there is a huge surplus of capacities. Gazprom pumped about 80 million cubic meters a day there, and the capacities allow 250.
Yamal-Europe has not been practically used in recent months, but if the consumption of Russian gas in Europe grows, it will be actively used.
SP: Will Nord Stream 2 be launched if there is a cold winter?
– For the office Olaf Scholz such a decision is akin to suicide. He is already criticized for his continued ties with Russia. Moreover, the cabinet is complexly constructed, the “greens” take a tough stance and control the Ministry of Economy, which is responsible for energy.