[Economics] How Russia continues to provide the EU with Natural Gas - What Russia is able and ready to do 2024-02-19
Russia has been an essential supplier of natural gas for Europe and the EU member states for a long time.
As a result of the Russo-Ukrainian-War however the gas deliveries were questioned and partly abandoned.
Russia would no longer deliver. Only Russia is to blame for the increased prices within the EU for natural gas. And the increased prices are without alternative.
But these claims deserve a closer look based on the previous stationary delivery routes. LNG is therefore not within the scope of this analysis.
On September 26, 2022 an explosion of the pipelines took place between Sweden and Poland. Three out of four threads were blown up. Since the leaked sea water has entered the three threads the inside's coating corroded and presumably caused irreparably damage. However one thread of Nord Stram 1 still remains functional. [5]
But gas deliveries from Russia were discontinued in 2022. According to the Polish government Russia is responsible for the delivery stop. While the Russian government claims that the reason is the absence of further orders. [6] [7]
The accusation of Russia being to blame is contradicted as it has already offered restarted deliveries. [8]
As a result of the Russo-Ukrainian-War a compressor station of the Sojus Pipeline in the Luhansk Oblast was taken by Russian armed forces. This caused the Ukraine to stop the natural gas delivery of 33 billion m³/year towards the EU on May 10, 2022. [10]
Also during the Russo-Ukrainian-War it was announced that Ukraine wants to expire the current contract from 2019 on natural gas deliveries on December 31. This would result in the end of the remaining capacities for direct natural gas deliveries through the Ukraine. Due to the entire and the remaining capacities this would be a significant reduction in the availability of natural gas and thus increase the price level in the EU. [11]
As a result of this bypass Hungary signed a contract with the Russian Gazprom group in September 2021 on natural gas deliveries. The contract includes the delivery of 4.5 billion m³/year over 15 years. This is remarkably as this contract completely bypasses the Ukraine as a transitland. [12]
Like the above mentioned contract with Hungary natural gas deliveries to the EU have been agreed on long term contracts. Flexible delivery volumes with minimum and maximum quantities can be negotiated. And the price can partly be constant and partly be tied to the current price level. High prices are given up in favor of more planning security.
Due to liberalization low price levels and planning security were abandoned in favour of a new flexibility. In one of the most important trading points for natural gas in Europe the average price remained for about a decade at around 20 Euros/MWh. And before the outbreak of the war on February 24, 2022 the price of natural gas rose to approximately 80 Euros/MWh in January 2022. [13] [14] [15]
In addition to the change in trade the EU Commission also declared the goal that the EU should no longer obtain natural gas from Russia by 2027. This import embargo includes natural gas deliveries via pipeline and LNG. [16]
However common misconceptions have already been recognized here. It has been proven that a departure from Russian natural gas via pipelines has not been teken place. Despite the political situation existing gas deliveries of Russia are served stable and even larger deliveries would be possible. In the absence of fully loaded pipelines the gas and consequently the electricity price levels in the EU could be reduced by higher imports.
In addition it can be seen that the reduced gas imports are not solely responsible for the increased price levels. There are at least two essential levers to reduce these gas price levels.
[1] Wie Europa mit Gas versorgt werden soll - 2012-12-07
https://www.tagesschau.de/wirtschaft/pipeline-ts-104.html
[2] The Gas Pipelines Linking Russia and Europe - 2022-02-03
https://www.statista.com/chart/26769/russian-european-gas-pipelines-map/
[3] Über diese Pipelines kommt russisches Gas - 2022-08-19
https://www.zdf.de/nachrichten/wirtschaft/erdgas-pipeline-ukraine-krieg-russland-100.html
[4] Durch welche Pipelines kommt das Gas? - 2022-03-08
https://www.tagesschau.de/wirtschaft/gaspipelines-kapazitaeten-101.html
[5] Ermittler gehen von Bomben mit großer Sprengkraft aus - 2022-09-29
https://www.spiegel.de/politik/deutschland/nord-stream-lecks-ermittler-gehen-von-bomben-mit-grosser-sprengkraft-aus-a-089aef88-b323-45f1-9ec8-74491bf8b5fc
[6] Russland stoppt Gaslieferungen - Darum geht es im Konflikt um die Jamal-Pipeline - 2021-12-29
https://www.n-tv.de/wirtschaft/Darum-geht-es-im-Konflikt-um-die-Jamal-Pipeline-article23026417.html
[7] Das Pipeline-Paradox: Putins Gas fließt jetzt über Deutschland nach Polen - 2022-04-27
https://www.focus.de/finanzen/erdgas-aus-russland-gasstopp-warum-deutschland-fuer-polen-jetzt-zum-gas-vermittler-wird_id_90365652.html
[8] Russia ready to resume gas supply to Europe via Yamal-Europe gas pipeline - 2022-12-25
https://edition.cnn.com/2022/12/25/europe/russia-yamal-europe-gas-pipeline/index.html
[9] MASTER PLAN - Ukrainian Gas Transmission System (UGTS) Priority Objects Modernisation and Reconstruction
https://www.energycharter.org/fileadmin/DocumentsMedia/Presentations/CBP-Ukraine_GTS.pdf
[10] Gasversorgung in Deutschland gewährleistet: Ukraine sucht laut Habeck nach neuen Wegen für Gas-Transit - 2022-05-11
https://www.tagesspiegel.de/politik/ukraine-sucht-laut-habeck-nach-neuen-wegen-fur-gas-transit-8140147.html
[11] Ende 2024 kommt kein Gas mehr aus Russland, warnt Ex-OMV-Chef Roiss - 2023-06-01
https://www.derstandard.de/story/3000000172646/russische-gaslieferungen-nach-oesterreich-enden-laut-ex-omv-chef-roiss-2024
[12] Ukraine und Ungarn bestellen wegen Gasstreit Botschafter ein - 2021-09-28
https://www.spiegel.de/ausland/ukraine-und-ungarn-bestellen-wegen-gasstreit-botschafter-ein-a-b6e68d3c-9284-4d35-a1df-f5c9d4958771
[13] Warum die EU mitverantwortlich für die hohen Gaspreise ist - 2021-11-04
https://www.mdr.de/nachrichten/welt/osteuropa/politik/russland-gaspreise-gazprom-eu-100.html
[14] Despite short-term pain, the EU’s liberalised gas markets have brought long-term financial gains - 2021-10-22
https://www.iea.org/commentaries/despite-short-term-pain-the-eu-s-liberalised-gas-markets-have-brought-long-term-financial-gains
[16] EU Natural Gas TTF
https://tradingeconomics.com/commodity/eu-natural-gas
[16] EU importiert mehr Flüssigerdgas aus Russland - 2023-08-30
https://www.tagesschau.de/wirtschaft/energie/eu-gas-lng-russland-100.html
Russia would no longer deliver. Only Russia is to blame for the increased prices within the EU for natural gas. And the increased prices are without alternative.
But these claims deserve a closer look based on the previous stationary delivery routes. LNG is therefore not within the scope of this analysis.
- Nord Stram Pipeline
- Jamal Pipeline
- Sojus & Urengoi-Pomary-Uschgorod Pipeline
- Blue- & Turk-Stream Pipeline
- The Policy
- Conclusion
Nord Stram Pipeline
The North Stram Pipelines are 4 threads that run through the Baltic Sea from Russia to Germany. Nord Stram 1 consists of two threads and was put into operation in 2011. Nord Stram 2 also consists of two threads but has not yet been put into operation as a result of the Russo-Ukrainian-War. North Stram 1 and 2 run almost parallel and each have a capacity of 55 billion m³/year or 110 billion m³/year in total. [1] [2] [3] [4]On September 26, 2022 an explosion of the pipelines took place between Sweden and Poland. Three out of four threads were blown up. Since the leaked sea water has entered the three threads the inside's coating corroded and presumably caused irreparably damage. However one thread of Nord Stram 1 still remains functional. [5]
Jamal Pipeline
The Jamal Pipeline runs from Russia through Belarus and Poland to Germany. The pipeline was put into operation in 1999 and has a capacity of 33 billion m³/year. [1] [2] [3] [4]But gas deliveries from Russia were discontinued in 2022. According to the Polish government Russia is responsible for the delivery stop. While the Russian government claims that the reason is the absence of further orders. [6] [7]
The accusation of Russia being to blame is contradicted as it has already offered restarted deliveries. [8]
Sojus & Urengoi-Pomary-Uschgorod Pipeline
From Russia through Ukraine to the EU runs the Soyuz and the Urengoi Pomary-Schuhhorod Pipeline. As a result of the routes one thread in the south goes through Ukraine and Moldova to Romania with the Trans-Balkans Pipeline. The two threads in the north connect in Belarus to the Jamal Pipeline and Slovakia, the Czech Republic and Austria via the transgas Pipeline. The entire capacity of Ukraine to export natural gas to the EU is at 178 billion m³/year. Based on this the Ukraine has the greatest capacities of a single country. However this information is based on the condition that the connection to the Jamal Pipeline is used as a feed towards Ukraine. But the exact routes of the pipelines would be beyond the scope of this analysis. [2] [4] [9,S.3]As a result of the Russo-Ukrainian-War a compressor station of the Sojus Pipeline in the Luhansk Oblast was taken by Russian armed forces. This caused the Ukraine to stop the natural gas delivery of 33 billion m³/year towards the EU on May 10, 2022. [10]
Also during the Russo-Ukrainian-War it was announced that Ukraine wants to expire the current contract from 2019 on natural gas deliveries on December 31. This would result in the end of the remaining capacities for direct natural gas deliveries through the Ukraine. Due to the entire and the remaining capacities this would be a significant reduction in the availability of natural gas and thus increase the price level in the EU. [11]
Blue- & Turk-Stream Pipeline
The Blue- and Turk-stream pipeline run from Russia through the Black Sea and Turkey to the EU. After both pipelines connect with each other in Turkey the resulting thread is connected to the Trans-Balkans Pipeline. As a result Bulgaria and Romania are also connected via the Blue and Turk stream pipeline. Blue stream was put into operation in 2003 and has a capacity of 16 billion m³/year. And Turk stream was put into operation in 2020 and has a capacity of 32 billion m³/year. [1] [2]As a result of this bypass Hungary signed a contract with the Russian Gazprom group in September 2021 on natural gas deliveries. The contract includes the delivery of 4.5 billion m³/year over 15 years. This is remarkably as this contract completely bypasses the Ukraine as a transitland. [12]
The Policy
Apart from the reduction of the availability by decommissioning pipelines for natural gas the EU has already taken another significant step to increase the price for natural gas. Before the start of the Russo-Ukrainian-War the market for natural gas imports was liberalized by the EU.Like the above mentioned contract with Hungary natural gas deliveries to the EU have been agreed on long term contracts. Flexible delivery volumes with minimum and maximum quantities can be negotiated. And the price can partly be constant and partly be tied to the current price level. High prices are given up in favor of more planning security.
Due to liberalization low price levels and planning security were abandoned in favour of a new flexibility. In one of the most important trading points for natural gas in Europe the average price remained for about a decade at around 20 Euros/MWh. And before the outbreak of the war on February 24, 2022 the price of natural gas rose to approximately 80 Euros/MWh in January 2022. [13] [14] [15]
In addition to the change in trade the EU Commission also declared the goal that the EU should no longer obtain natural gas from Russia by 2027. This import embargo includes natural gas deliveries via pipeline and LNG. [16]
Conlusion
In this summary only gas via the pipeline imports were viewed. LNG is not within the scope of this analysis.However common misconceptions have already been recognized here. It has been proven that a departure from Russian natural gas via pipelines has not been teken place. Despite the political situation existing gas deliveries of Russia are served stable and even larger deliveries would be possible. In the absence of fully loaded pipelines the gas and consequently the electricity price levels in the EU could be reduced by higher imports.
In addition it can be seen that the reduced gas imports are not solely responsible for the increased price levels. There are at least two essential levers to reduce these gas price levels.
[1] Wie Europa mit Gas versorgt werden soll - 2012-12-07
https://www.tagesschau.de/wirtschaft/pipeline-ts-104.html
[2] The Gas Pipelines Linking Russia and Europe - 2022-02-03
https://www.statista.com/chart/26769/russian-european-gas-pipelines-map/
[3] Über diese Pipelines kommt russisches Gas - 2022-08-19
https://www.zdf.de/nachrichten/wirtschaft/erdgas-pipeline-ukraine-krieg-russland-100.html
[4] Durch welche Pipelines kommt das Gas? - 2022-03-08
https://www.tagesschau.de/wirtschaft/gaspipelines-kapazitaeten-101.html
[5] Ermittler gehen von Bomben mit großer Sprengkraft aus - 2022-09-29
https://www.spiegel.de/politik/deutschland/nord-stream-lecks-ermittler-gehen-von-bomben-mit-grosser-sprengkraft-aus-a-089aef88-b323-45f1-9ec8-74491bf8b5fc
[6] Russland stoppt Gaslieferungen - Darum geht es im Konflikt um die Jamal-Pipeline - 2021-12-29
https://www.n-tv.de/wirtschaft/Darum-geht-es-im-Konflikt-um-die-Jamal-Pipeline-article23026417.html
[7] Das Pipeline-Paradox: Putins Gas fließt jetzt über Deutschland nach Polen - 2022-04-27
https://www.focus.de/finanzen/erdgas-aus-russland-gasstopp-warum-deutschland-fuer-polen-jetzt-zum-gas-vermittler-wird_id_90365652.html
[8] Russia ready to resume gas supply to Europe via Yamal-Europe gas pipeline - 2022-12-25
https://edition.cnn.com/2022/12/25/europe/russia-yamal-europe-gas-pipeline/index.html
[9] MASTER PLAN - Ukrainian Gas Transmission System (UGTS) Priority Objects Modernisation and Reconstruction
https://www.energycharter.org/fileadmin/DocumentsMedia/Presentations/CBP-Ukraine_GTS.pdf
[10] Gasversorgung in Deutschland gewährleistet: Ukraine sucht laut Habeck nach neuen Wegen für Gas-Transit - 2022-05-11
https://www.tagesspiegel.de/politik/ukraine-sucht-laut-habeck-nach-neuen-wegen-fur-gas-transit-8140147.html
[11] Ende 2024 kommt kein Gas mehr aus Russland, warnt Ex-OMV-Chef Roiss - 2023-06-01
https://www.derstandard.de/story/3000000172646/russische-gaslieferungen-nach-oesterreich-enden-laut-ex-omv-chef-roiss-2024
[12] Ukraine und Ungarn bestellen wegen Gasstreit Botschafter ein - 2021-09-28
https://www.spiegel.de/ausland/ukraine-und-ungarn-bestellen-wegen-gasstreit-botschafter-ein-a-b6e68d3c-9284-4d35-a1df-f5c9d4958771
[13] Warum die EU mitverantwortlich für die hohen Gaspreise ist - 2021-11-04
https://www.mdr.de/nachrichten/welt/osteuropa/politik/russland-gaspreise-gazprom-eu-100.html
[14] Despite short-term pain, the EU’s liberalised gas markets have brought long-term financial gains - 2021-10-22
https://www.iea.org/commentaries/despite-short-term-pain-the-eu-s-liberalised-gas-markets-have-brought-long-term-financial-gains
[16] EU Natural Gas TTF
https://tradingeconomics.com/commodity/eu-natural-gas
[16] EU importiert mehr Flüssigerdgas aus Russland - 2023-08-30
https://www.tagesschau.de/wirtschaft/energie/eu-gas-lng-russland-100.html
Kommentare
Kommentar veröffentlichen