On September 14th information surfaced about Germany already not only legally, but also physically limiting Gazprom‘s access to the OPAL gas pipeline in order to interfere with the supply of gas through Nord Stream.
OPAL is the southern branch, along the Polish border. Gazprom supplies euro-consumers in that direction, which bypasses Ukraine.
The introduced physical restriction immediately led to two events.
Firstly, the gas price on the main platform of Europe, the Dutch TTF, immediately jumped by 7%, up to 15.46 euros per MW/h (gas is traded in these units, different gas has different calorific value, for example, the Russian one is higher than the Norwegian one). During the session the price rise reached 9.6%.
Secondly, Gazprom sharply increased pumping along NEL, the second gas pipeline delivering gas to Europe from the exit point of “North Stream-1”. Consumers in Western Europe receive gas in full.
The European gas network is highly branched and it can be pumped from any source to any place, as long as there is enough. There are already effective systems for offsetting supplies, so as not to go back and forth. Therefore, the effectiveness of this decision is so-so. Once again, Gazprom remains a co-participant of OPAL except it can’t pump its own gas.
As I wrote earlier, this event may be noticeable for Gazprom, but it is not so significant that it influenced its decisions. Russia has more than enough ways of manoeuvring.
Today all storage facilities are pumped up to the eyeballs, and at the present moment the needs are small – so they reduced the supply, pretending to have “obey the decision on limitations…” It is in the future, when all “limiters” will ask for an increase in the supply, that it will be possible, referring to their own decision on limitations, to set such conditions for these “limiters” that everything will pay off with interest and henceforth they won’t have the desire to show arrogance!
The Europeans apply antitrust legislation, which is designed to develop the competition. Why it is necessary to free up 50% of the gas pipeline’s capacity? According to the idea of the legislators, it has to allow competition to arise. But when nobody can physically come to the start point of the OPAL gas pipeline, alternative suppliers have nowhere to come from. There physically isn’t and can’t be another supplier in OPAL!!! It’s like banning water from being carried in full buckets!
I think that the decision on OPAL will be nullified if not immediately, then by the end of the next year for sure. As a last resort, if not to reverse the judgment (and there are all grounds to do this), they will create some kind of layer company that will buy gas from “Gazprom” in the middle of “Nord Stream-1” and deliver it to OPAL.
And again, the decision doesn’t influence the competition of “Nord Stream-2” in any way. For it, the separate EUGAL gas pipeline with a capacity of 55 billion cubes of gas per year is being built from the exit point, and there the Poles, as in the case of OPAL, will not be able to insert their sticks in its wheels, since it has no relation to the Poles and does not affect the “diversification” of gas supplies to Poland.
Yes, this gas European market is tight, but not everyone can increase supplies.
Qatar, for example, can’t replace Gazprom, although it can move its share by a few percent. Similar to American liquified natural gas, which is delivered by request, and not under long-term contracts. The head of the Austrian OMV spoke about this in an interview:
“We like to work with Gazprom, even in the area of liquified natural gas as soon as we order a batch, it is delivered at once. At the same time, liquified natural gas from other suppliers can be delivered only at a determined price in the market”.
Azerbaijani TANAP was also described as an alternative to Gazprom. But from the media it is known that Azerbaijani gas supplies will reach a maximum of 6 billion cubic meters of gas (a drop in the ocean for Gazprom) only in 2020, and the main consumer isn’t even Europe, but Turkey.
So, they will be able to buy, but not replace it. At the same time, Gazprom continues to sell gas in the quantity it needs, as it did before. In Europe they still think that they have a premium market, although it has long been known that since the beginning of the 2000’s, after the Asian crisis, that the premium market became East Asian. China, Japan, South Korea, and India consume several times more gas than the whole of Europe combined.
Supplies will only grow steadily. The number of gas pipelines will grow in the same way. And in Europe, when they will want to increase the gas supply, new gas pipelines will not be built, and all restrictions will have to be lifted. Everything will happen via the current: “Nord Stream-1”, “Nord Stream-2”, “Yamal-Europe”, “Turkish stream” (2nd branch). Therefore, even if the Europeans will want to construct a “Nord Stream-3”, they will have to agree with all countries in advance and remove restrictions: the new gas directive and the Third Energy Package.
Perhaps something will also go along the Ukrainian gas transit system, but only on conditions necessary to Russia and not in the volumes as before. Gazprom announced its position for the coming years: one more year of large transit through Ukraine (50 billion cubic meters) and further – a long-term contract for pumping 10-20 billion cubic meters per year. This is the maximum possible. And once again, under certain conditions. And even more so in order to save the existence of this gas transit system from collapse, so that it isn’t cut – you never know, it will come in handy sometime in the future.
In general, some may think that the turmoil over Russian gas pipelines is an example of the solidarity of Europeans and Ukrainians. They would be mistaken. Ukraine and its gas transit system are only a tool for western countries, a tool that is somewhere aside. Poland fights for becoming a gas hub, the US fights for selling its liquified natural gas and in general, in principle, to limit Russia’s opportunities to earn any income. And the availability of the Ukrainian gas transit system is only an excuse for the US and their satellites to put a stick in the wheel of Gazprom and the rest of Europe.
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