How Putin sent EU energy prices rocketing – POLITICO


Press play to take heed to this text

Russia’s invasion of Ukraine prompted many of the EU to get up to the hazard of relying on the Kremlin for its pure gasoline.

However shifting away from Russian gasoline, which final 12 months accounted for 40 % of EU demand, is a painful course of — and Russian President Vladimir Putin is not pulling any punches.

Even earlier than the invasion of Ukraine, his state-backed export monopoly Gazprom slowly started promoting much less pure gasoline to European patrons, draining storage and slowing pipeline flows to a trickle.

These provide modifications — coupled with Putin’s bombastic statements, false guarantees and periodic jokes at Brussels’ expense — prompted vitality costs to spike, plunge, get well and dip once more, as anxious merchants tried to foretell how a lot gasoline they might rely on come winter.

This is a take a look at how Russian vitality video games — and reactions to them within the West — made EU markets go haywire.

Late 2021: Run-up to the Ukrainian invasion

In response to the European Fee’s official gasoline market experiences, in 2021 Gazprom supplied 137 billion cubic meters (bcm) of gasoline by way of pipeline to EU international locations. That is 7 % more than in 2020, which was a 12 months of unusually low demand as a consequence of lockdowns — however represents a 16 % drop in deliveries in comparison with 2019, the final regular 12 months pre-COVID. A lot of that decrease 2021 provide was as a consequence of a extreme pullback from October to December, when Gazprom despatched 24 % much less to the EU than in the identical interval in 2020. The uncertainty forward of winter prompted never-before-seen value spikes on EU gasoline buying and selling markets, going from lower than €15 per megawatt-hour (MWh) in January to a year-end document of €180/MWh.

AUGUST 6: Gazprom dramatically reduces gasoline flows by way of the Yamal pipeline — which runs by way of Belarus and Poland — citing a fire at a gasoline processing facility in western Siberia. Gazprom as a substitute begins withdrawing gasoline held in underground storage within the EU to fulfill contractual deliveries to purchasers, exacerbating an already-existing downside of low storage levels.

AUGUST 16: Gazprom solely books 4 percent of obtainable gasoline transit capability provided by Ukraine for September, inflicting gasoline costs to spike in anticipation of the decrease flows.

SEPTEMBER 10: Gazprom’s Russia-to-Germany Nord Stream 2 pipeline is fully built, ready just for certification from German regulators to start working.

OCTOBER 1: Gazprom stops sending gasoline through Ukraine to Hungary, as Moscow and Budapest sign 15-year contracts to ship provides by way of Russia’s TurkStream pipeline as a substitute.

OCTOBER 5: Putin blames the “hysteria and confusion” in European vitality markets on “ill-balanced choices” like local weather change and vitality transition coverage. EU gasoline costs spike to a document €165 per megawatt-hour.

OCTOBER 6: Fuel costs fall when, a day later, Putin says: “Growing gasoline provides … can and needs to be finished.” He additionally calls for quick German approval of Nord Stream 2.

OCTOBER 8: The Romanian Power Suppliers Affiliation warns that its members’ requests for extra gasoline provides for winter are being refused by Gazprom.

OCTOBER 13: Gazprom sells so-called spot volumes of gasoline to the European market — that means gross sales at open public sale exterior of multi-year provide contracts — for the last time. Since then, solely long-term purchasers have been in a position to obtain pre-agreed deliveries by way of pipeline, resulting in a decline within the quantity of Russian gasoline piped to Europe.

OCTOBER 15: Ukraine’s gasoline grid operator warns Gazprom is barely sending a fraction of the booked quantity of gasoline by way of Ukraine.

OCTOBER 19: Poland warns EU competitors officers that Gazprom is “limiting flows by way of routes aside from Nord Stream 1” and asks for an investigation into Gazprom for market manipulation.

OCTOBER 21: Putin ridicules the European Fee for discouraging long-term gasoline provide contracts in favor of spot trades, and provides he can ship the EU the additional gasoline it wants if regulators would solely approve Nord Stream 2.

OCTOBER 26: The EU announces it’s gathering proof for a contest probe to see if excessive gasoline costs are attributable to manipulation by main suppliers like Gazprom.

OCTOBER 28: Putin orders Gazprom to start filling its abnormally low underground storage within the EU forward of winter, prompting EU gasoline costs to fall under €80/MWh for the primary time in September. That storage replenishment would not find yourself occurring.

NOVEMBER 16: Germany’s infrastructure regulator says it can’t certify the Nord Stream 2 pipeline till possession is transferred to a subsidiary in Germany.

DECEMBER 16: German regulators announce that Nord Stream 2 won’t be certified earlier than no less than summer time 2022.

DECEMBER 21: Russian gasoline flows by way of the Yamal pipeline cease then unexpectedly start flowing in reverse, carrying gasoline east away from Germany. Fuel costs hit a document excessive of €180/MWh. Ukraine’s Naftogaz responds by calling for a probe into potential market manipulation by Gazprom. Putin as a substitute blames grasping Western merchants for reselling low cost Russian gasoline obtained by way of contract at an enormous markup and parking it in tax-friendly Ukrainian storage.

2022: Invasion, sanctions and gasoline shut-offs

Preliminary Gazprom data from January to July 2022 reveals exports to its so-called far overseas — that means international locations exterior the previous Soviet Union are down about 35 % in comparison with final 12 months. That determine takes into consideration increased deliveries to China, that means the true discount to Europe is extra extreme. Since Russia invaded Ukraine in February, Gazprom has engaged in a collection of provide disruptions to EU-based purchasers following a mandate to settle funds in Russian foreign money, which the European Fee has forbidden as a possible violation of EU monetary sanctions.

FEBRUARY 21: Putin recognizes two separatist areas in japanese Ukraine and orders in Russian troops.

FEBRUARY 22: In response, Germany halts administrative certification of Nord Stream 2.

Putin says that “Russia, for its half, intends to proceed uninterrupted provides of this uncooked materials, together with [liquefied natural gas], to world markets.” Dmitry Medvedev, former Russian president and deputy chair of Russia’s safety council, tweets: “Welcome to the courageous new world the place Europeans are very quickly going to pay €2,000 for 1,000 cubic meters of pure gasoline!”

FEBRUARY 24: Russia launches a full-scale invasion of Ukraine. Brent crude, the worldwide oil benchmark, exceeds $100 a barrel for the primary time since 2014. EU gasoline costs hit €128/MWh.

MARCH 2: U.S. oil and gasoline main Exxon announces it’s going to halt new funding in Russia and pull out of a significant gasoline undertaking, Sakhalin 1. Fuel costs hit €157/MWh.

MARCH 7: Leaked paperwork from the European Fee present a proposal to cut back EU reliance on Russian gasoline by two-thirds, notably by way of the obligatory filling of EU underground gasoline storage ranges to 80 % by October. Costs for usually low cost summer time gasoline briefly hit €345/MWh.

APRIL 26: Gazprom halts shipments to Poland and Bulgaria over a refusal to pay in rubles.

APRIL 27: Kremlin spokesperson Dmitry Peskov warns any shopper refusing to pay for gasoline utilizing a ruble-denominated checking account dangers seeing provides lower off.

MAY 11: Ukraine announces unauthorized gasoline withdrawals from a pipeline passing by way of “territories beneath Russian army occupation” and warns Gazprom to make use of one other route. Since then, Russia merely sends much less gasoline by way of Ukraine.

MAY 16: Russia halts electricity deliveries to Finland, in a transfer broadly perceived as a response to Finland’s application for NATO membership on Might 12.

MAY 21: Gazprom stops deliveries to Finland’s Gasum.

MAY 31: Gazprom “fully suspends gasoline provides” to Dutch firm GasTerra “as a consequence of failure to pay in rubles.”

JUNE 1: Gazprom stops deliveries to Ørsted, Denmark’s largest vitality firm, “as a consequence of nonpayment in rubles.”

JUNE 15: Gazprom announces flows will fall to 40 % capability on Nord Stream starting June 16.

JUNE 17: France and Italy receive much less Russian gasoline than anticipated days after French President Emmanuel Macron and Italian Prime Minister Mario Draghi go to Kyiv to support Ukraine’s bid to hitch the EU.

JULY 11: Nord Stream goes offline for annual 10-day upkeep.

JULY 18: Gazprom sends retroactive legal notice to Germany’s Uniper and different European purchasers, claiming lowered gasoline deliveries since June 14 are as a consequence of elements past the corporate’s management. Italy’s Eni, Austria’s OMV and France’s Engie additionally report lowered deliveries.

JULY 20: Putin dangles a risk to spice up gasoline flows to Europe whereas Nord Stream is underperforming: “We’ve one other route prepared — it’s Nord Stream 2.”

JULY 21: Nord Stream resumes deliveries, however at 40 % capability. Putin warns flows might dip once more as a result of delayed return of a gasoline turbine from Canada.

JULY 27: Deliveries by way of Nord Stream drop to twenty % capability. Putin blames the shortage of a Siemens turbine wanted to push extra gasoline by way of the road, however Kyiv factors out that Moscow remains to be paying for transit house by way of Ukraine and never utilizing it.

JULY 30: Gazprom stops supplying gasoline to Latvia “as a consequence of violation of the circumstances for gasoline withdrawal,” after information that Latvian vitality agency Latvijas Gaze discovered an alternate provider of Russian gasoline which didn’t require cost in rubles.

AUGUST 3: Gazprom says EU, U.S. and U.Okay. sanctions towards Moscow are “making it inconceivable to deliver” the Siemens gasoline turbine again to Russia to spice up flows by way of Nord Stream. German Chancellor Olaf Scholz counters that “nothing stands in the way in which of additional transport.”

Former German Chancellor Gerhard Schröder says he met with Putin in Russia to debate the potential for a peace cope with Ukraine — concurrently urging Berlin to restart certification of Nord Stream 2. “The excellent news is that the Kremlin desires a negotiated settlement,” he says. “[But] in case you don’t need to use Nord Stream 2, you need to bear the results. And they are going to be enormous in Germany.”

This text is a part of POLITICO Professional

The one-stop-shop resolution for coverage professionals fusing the depth of POLITICO journalism with the ability of know-how


Unique, breaking scoops and insights


Personalized coverage intelligence platform


A high-level public affairs community





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *