Where is Russia in terms of EU gas supplies?

By Dr. Sandeep Tripathi and Dr. Kirill Sablin

Gas supply from Russia to the EU before February 2022

For a long time, Russia has been a key supplier of natural gas for EU countries. PJSC Gazprom is the only operator using the pipeline for gas supply. The company uses long-term contracts with the “take-or-pay” condition as the basis of its activities in the European gas market. The total volume of gas exports from the Russian Federation to European countries was 174.3 billion cubic meters in 2021 [Gazprom Export – https://gazpromexport.ru/]. In particular, in the last four months of 2021 (September to December), the company pumped 25.6 billion cubic meters of gas to the EU (e.g. 6.3 billion cubic meters in September; 6.4 billion cubic meters in October; 5.9 billion cubic meters in November and 7 billion in December cubic meters [Actual gas supplies for the EU – https://www.gazprom.ru/investors/disclosure/actual-supplies/2021/].

PJSC Gazprom exported 11.4 billion cubic meters of gas to the EU in January and February 2022. It is important to note that the Russian company increased its gas supplies to Europe in February 2022 compared to the volumes of export for the same period last year. In February 2022, exports increased compared to the previous year, in particular to Italy – by 135.5%, to Poland – by 41.1%, to Bulgaria – by 26.4%, to Slovenia – by 53.7% [Gazprom increased gas exports in Europe in the February / Russian Newspaper – https://rg.ru/2022/03/01/gazprom-v-fevrale-uvelichil-eksport-gaza-v-evropu.html].

From the War to Now – Volume Status

After the conflict began, government officials in Russia used the term “special military operation” on 24e February as PJSC Gazprom continued to export gas to the European market. The company continued to fulfill its obligations under long-term contracts after the start of a special military operation and the imposition of anti-Russian sanctions according to company representatives. In addition, during the special military operation, the decline in exports to EU countries has been lower than in general since the beginning of 2022.

From February 24 to April 26, 2022, approximately 20.5 billion cubic meters of gas were transported to the EU through gas pipelines according to official information from the gas company. This is around 20.5% less than the same period in 2021. After April 26, 2022, data on gas export volumes to the EU are no longer available. The Russian gas pipeline arrives in the EU via the Nord Stream (with a capacity of 55 billion cubic meters per year), the Yamal-Europe gas pipeline (with a capacity of 33 billion cubic meters per year), via the system gas transport from Ukraine and via Turkey via the Turkish stream. Under a long-term contract in 2022, Russia is to supply at least 40 billion cubic meters of gas through Ukraine’s gas transmission system under the “take-or-pay” system. The Russian gas supply was not interrupted for a single day until the end of April 2022.

Gazprom cut gas supplies through the Nord Stream pipeline by 40% in June, citing difficulties in repairing equipment due to sanctions [Gazprom has reduced gas production and reduced supplies to non-CIS countries – https://www.kommersant.ru/doc/5444481]. The problem for the EU is that it will not be able to phase out Russian gas quickly for several reasons. The first reason is the presence of infrastructural obstacles. For example, the construction of receiving terminals for liquefied natural gas on the Baltic Sea coast. Second, the transition to low-carbon technologies and the “green economy” has not been as rapid and requires significant investment. The third reason has to do with relations within the EU and a more loyal position of certain European countries towards Russia. For example, Hungarian Prime Minister V. Orban said that the sanctions imposed on Russia were not working and that “Europe shot itself in the lungs”.

Full facts and figures on Russian gas after payment system lockdown

President V. Putin signed a decree on March 31, 2022 (Decree on a special procedure for fulfilling the obligations of foreign buyers to Russian natural gas suppliers – http://kremlin.ru/events/president/news/68094 ) on the transfer of payment for gas supplies to hostile countries in rubles after the introduction of new sanctions by the USA, EU, UK and Canada. The scheme provides for the buyer to open a special account in Gazprombank, to which he credits the currency, then he exchanges it for rubles and transfers them to PJSC Gazprom. As a result, according to Russian Deputy Prime Minister A. Novak, in May 2022 about half of gas importers opened special accounts at Gazprombank to pay for supplies in rubles. [Novak: about half of Russian gas importers opened accounts in rubles – https://www.vedomosti.ru/business/news/2022/05/19/922675-okolo-polovini-importerov].

Does the EU have a viable alternative if Russia shuts off gas supplies?

Over the past week, Russian energy giant Gazprom decided to cut 20% of its capacity due to a turbine problem. Russian President Putin has warned in a warning tone that gas flows through the Nord Stream 1 pipeline could be restricted unless the sanctioned policy is resolved.

What are the options then?

  1. Liquefied natural gas from the United States and Qatar.
  2. Gas from Azerbaijan and Turkmenistan passing through Iran.
  3. LNG is for the medium to long term outlook. Azerbaijan – technical and economic difficulties.
  4. The EU will have no choice but to reduce its energy consumption simply because new gas sources will not replace Russian gas in terms of volume supply and infrastructure.

If Russia shuts down in winter, the ramifications of that in the EU

The EU will use electricity saving and space heating. It will also force the EU to use traditional energy sources (coal and wood) and reduce economic activity in some EU countries.

This could lead to high consumption of liquefied natural gas. Overall, EU member states’ gas stocks have reached 52% of their capacity, up from 43% at the same time in 2021

Dr. Sandeep Tripathi is founder and president of the Forum for Global Studies. Dr. Kirill Sabin is Associate Professor in the Department of Economics at Kemerovo State University, Russia.

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