NewEnergyNews: Russian NatGas Started The War In 2021


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    Friday, May 13, 2022

    Russian NatGas Started The War In 2021

    Gazprom set the Russian invasion of Ukraine in motion

    Alan Riley, May 3, 2022 (Atlantic Council)

    In the run-up to Russia’s invasion of Ukraine, Gazprom was already busy setting the stage…[by keeping EU natural gas] supplies low and prices high in advance of the conflict. Moscow wanted to keep the Europeans vulnerable and therefore less likely to intervene when Russia invaded Ukraine…[Gazprom] held back natural gas from the European spot markets, and as a consequence, gas prices in Europe spiraled to unheard-of levels of more than $1000 per thousand cubic meters over the winter. Gazprom also refused to fully refill European storages, leaving energy commentators across the continent obsessing daily throughout the winter at the low level of gas stocks…

    …[A]s China came out of lockdown beginning in the spring of 2021, Chinese demand accelerated, creating a major global knock-on effect on natural gas prices…[T]his price spiral was exacerbated by a series of supply disruptions. However, Gazprom actions turned what would have been an expensive winter into a major European energy crisis…[T]his softening-up exercise did not ultimately deter the European Union from supporting Ukraine…[but] high natural gas prices and low storage levels still deter politicians in some EU member states, notably Germany and Austria, from voicing full-throttled support for Ukraine…

    Gazprom has so far been able to avoid scrutiny…partly because it began its softening-up operations well before the actual invasion took place on February 24 and partly because the supply decisions made by Gazprom looked at first sight like ordinary commercial decisions from outside the market. In fact they were not….Gazprom refilled storages across Europe—some of which it owned—through summer, in time for the winter heating season…Then suddenly, in the spring of 2021, it…began to reduce its supply to the European spot market…[which] increased spot prices…This pricing strategy was reinforced by discontinuing its more-than-decade-long practice of refilling European gas storages…By December 2021, European gas storages were at the lowest point at any time in the last five years. Gazprom made the situation still worse by draining its own storages to fulfill its own contracts rather than importing more gas…[which left] European gas storage dangerously low at the height of winter, increased market panic, and further inflated gas prices…

    In no way can Gazprom’s actions from the spring of 2021 and then on into the winter of 2021-22 be viewed as the decisions of a normal commercial supplier…[Gazprom’s reputation as a reliable and stable supplier of gas] was abandoned by the Russian state and Gazprom last year in the interest of winning a war against Ukraine…Europe did open itself to be able to be softened up…[States] undertook decarbonization without thinking through the implications for supply security, particularly by switching off coal and then deciding to just import more Russian natural gas…[A] focus on supply security is likely to become a key part of a redesigned European energy security policy…[by] making greater use of non-Russian gas sources (including LNG), deploying renewables at greater scale, and encouraging wider acceptance and adoption of nuclear power…The mistake the Kremlin made in using Gazprom so explicitly as a weapon in its war-making is that it left Gazprom open to being heavily regulated by the EU…” click here for more


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