Is it Russia's fault that Europe has a lack of natural gas?

Russian President Vladimir Putin has pledged to help fill European gas stocks as energy prices are rising, but gas supplies and political tensions are continuing to challenge energy markets, causing prices to remain high. This has caused businesses to increase prices for consumers, who are already facing the rising prices of other services.

Moscow is accused of using the overburdened situation to push ahead with the activism of the Russian pipeline going under the Baltic Sea: North Stream 2, which is awaiting the approval of German regulators who have been criticised by Ukraine, the United States and other states.

With Europe dependent on the import of gas and Russia providing 40 per cent or more of these imports, Putin has said the new gas pipeline is filled with gas and could help increase supplies “one day”, after being approved by German regulators.

How did Europe get involved in this situation?

The reasons are many. The number one reason is the cold winter that ran out of gas reserves that are used to generate electricity and usually replenish in summer. But this did not happen during this year.

The hot weather caused more gas reserves than usual to be exhausted because of the increased demand for air conditioning. Less wind meant that there would be fewer production of renewable energy, causing generators to operate more with gas fuels. Limited supplies of liquid natural gas, a more costly option transported by ships and not through gas pipelines, were purchased by consumers in Asia.

Furthermore, Europe, for years now, has focused more on gas purchase contracts at daily prices, instead of long-term contracts. The gas giant, controlled by the Russian state, Gazprom, has met the requirements for long-term contracts, but has sent no gas beyond the requirements outlined in the contract. Putin has said consumers who have such contracts will pay far less for gas than other buyers.

The prices were seven times higher in early October compared to the beginning of this year, and by the end of the year, four times more have been raised.

What role does the North Stream pipeline 2 play?

Gazprom has invested billions of dollars to build the $1,234km-long gas pipeline to Germany. This pipeline would enable Russia to sell gas directly to a large consumer and avoid the gas pipeline through Ukraine. The latter is facing intense pressure from Russia since Moscow annexed the Ukrainian Crimea Peninsula in 2014 and continues to support separatists in Ukraine.

Even before the hostilities of 2014, Moscow had launched efforts to diversify gas supplies routes to the European Union, saying that the Ukrainian system was destroyed and that gas was lost in pipelines for this reason.

Ukraine could lose two billion dollars a year as a tranche fee. She and Poland, which is one of the other gas pipeline routes, are strongly opposing the North Stream pipeline 2. The United States and several other states have also strongly criticised him, saying this project will increase Europe's dependence on Russia in terms of energy.

Some analysts have said they do not expect North Stream 2 to activate during this winter. There has been speculation that Europe can allow the operation of this pipeline until regulators make a decision on this project, or perhaps that could happen if Russia sends more gas through Ukraine.

Does Russia have other gas supplies?

Gazprom says no. The chief export chief, Elena Burmistrov, has stated: “We are not interested either in record low or high price “, adding that “we want to see a well-balanced and predictable market”.

At least some analysts agree.

Thomas O'Donnell, a geopolitical and energy analyst at the Hertie School in Berlin, says Russia has had to fill its gas reserves like the EU after a cold winter.

While Putin is enjoying his role as “the gas supply” and has used the lack of gas to pressure to approve the activism of North Stream 2, “reality is that... simply, there was no Russian reserve gas to export until Russia completes its gas stocks for domestic use for winter<3>, says OCEDonell, who writes globally. “-God-in-law made”, he adds.

O'Donell says the only way Russia can help compensate gas shortages this winter would be to send more gas through Ukraine, assuming Gazprom is willing to do so.

Putin has ordered Gazprom to send gas to European depots after Russia completed filling its reserves last week, but the amount of gas Russia can send, according to OCEDonelli, is “limited to”.

“He could get more attention if he helped more”, O'Donell says.

American officials agree.

“Russia can and should provide additional supplies through Ukraine, a state that has sufficient pipeline capacity and they do not need North Stream 2 for such a thing”, says Karen Donfried, senior American official for Europe.

And if Russia fails to do so, of course it will damage Europe's energy security”, she adds.

Underlining Europe's dependence on Russian gas, Putin and Gazprom could hope for the EU's most favourable market regulations for the North Stream 2 project, O'Donell says.

The North Stream 2 pipeline has faced a new challenge, as on 16 November, German regulators suspended the approval process due to a problem with the operator's status under German law.

What effect can Europe's lack of gas have?

Natural gas prices, sooner or later, will reflect on the fees of citizens and businesses dealing with electricity and gas.

The European Commission said that raising the energy price would prevent the recovery from pandemic, because the most expensive bills would prevent consumers from spending on other things and businesses would not make investments.

The situation on the European market has also affected price hikes in the U.S., even though the situation of rising prices on the American market is not close to the rate of rising prices in Europe.

What does that mean for winter?

Analysts have said this is hard to predict. Everyone hopes there will be no harsh winter that could threaten supplies.

Analysts have speculated that electricity could be rationed for some industrial consumers at first if the situation gets worse.

An energy apocalypse ʹ a total power loss or heat, if gas reserves drop to zero and cannot be replaced, possibly could lead to the death of people, apart from the poor, as happened earlier this year in Texas, when a winter storm caused power cuts that led to more than 200 deaths.

What about Belarus's threat to cut off gas supplies?

Poland and other EU states have accused the authoritarian Belarusian leader, Alyaxasander Lucashenka, of trying to use the lenders, leading towards the EU through borders between Belarus and Poland, of taking revenge on the sanctions the European bloc has imposed on Belarus due to the crackdown on protests.

As the EU has threatened it with more sanctions, Lucashenka has threatened to cut off Russian gas supplies passing through Belarus to the EU.

Even though his statement shocked even more markets, Lucashenka is unlikely to live up to this threat, his political dependence on Russia and Moscow's desire to maintain the reputation of a reliable supplier.

Valerry Karbalevich, an independent Balkan analyst, rejects Lucas' threat.

The decisions are made in Moscow, not in Minsk”, he says.

“Lukenka wants to scare the EU and bring Putin into confrontation, trying to provoke the Kremlin to take more radical” actions, Karbalevic adds. / REL