HomeMediaLatest NewsThe gas pincers: Europe is driving itself into a fuel impasse because of Ukraine

The gas pincers: Europe is driving itself into a fuel impasse because of Ukraine

12 May 2022

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Svobodnaya Pressa Internet portal on the decision of the Russian government to introduce special economic measures against a number of foreign companies.

On May 11, the Russian government 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.

Alexey Belogoryev has not yet seen 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 sanctions against the "daughters", which are responsible for gas supply, but they have contracts for the purchase of Russian gas and distribution mainly in 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 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 pumping 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.

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