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Page added on October 2, 2014
Russia-Europe Gas Game Heats Up as Winter Looms
A cat and mouse game is on between Europe and Russia over gas supplies as the continent switches into the winter heating season.
Since September, Russia’s state-controlled Gazprom has sent less-than-requested deliveries to Poland, Slovakia, Austria and Hungary — after the European Union began sending gas to Ukraine — in a clear warning from Moscow ahead of the winter heating season which officially starts on Oct. 1, when the industry switches to higher pricing.
“Nobody should be surprised by what Russia does. They want to keep pressure on Ukraine… at the start of the heating season,” said Michael LaBelle, a gas expert at the Central European University in Budapest.
Russia is Europe’s biggest supplier of natural gas, meeting almost a third of annual demand and in return, Gazprom receives around $80 billion in annual revenues from its European customers, making up the majority of its income.
Moscow halted gas flows to Ukraine three times in the past decade, in 2006, 2009 and since June this year, although this year gas for the EU via Ukraine has so far continued to flow.
Opening up gas flows eastward was part of the EU’s response to Gazprom’s decision to cut supplies to Kiev in June. Slovakia, Poland and Hungary can also send gas to Ukraine but so far deliveries have not been without incident.
Poland temporarily stopped deliveries to Ukraine last month after Warsaw said it was getting less gas from Russia than requested. Hungary stopped eastward supplies last week in order to fill its own storage tanks ahead of winter.
Slovakia, with the largest EU-capacity to Ukraine, had maintained deliveries but saw its own gas imports from Russia fall below requested amounts in September.
While analysts have not seen the situation so far as the start of a “gas war,” they agree it is a warning to Europe that Russia is ready to retaliate should Brussels impose further sanctions on Moscow over its intervention in Ukraine.
“It (the Russian export reductions) could actually be in the end quite harmless. But the fact that they did not tell anyone in advance, (shows) that nobody should trust any explanation he or she gets, and that in itself is damning,” Czech energy security ambassador Vaclav Bartuska said this week.
He added it would be foolish to expect gas to flow as usual through Ukraine this winter.
Deal?
Traders have, however, pointed out that Russia’s recent reductions to Europe were within contractual allowances and came during times that EU gas storage tanks are well filled.
Gas Infrastructure Europe data show that the EU’s gas storage sites are filled to an average of over 90 percent, compared to just 68 percent this time last year.
“Most of the EU has its gas tanks filled to the rims, so they don’t need more gas at the moment, while Gazprom needs to still fill its domestic reserves ahead of the Russian winter, so I’m not surprised by its flow reductions to the EU, which were all within contractual allowances,” one EU utility trader said.
While gas deliveries to Germany, Gazprom’s biggest customer, should continue through the Nord Stream pipeline which bypasses Ukraine, the outlook is far less certain for central and southeastern European nations which receive most or all of their imports from Russia and via Ukraine.
To deal with a potential shortfall this winter, the European Union has prepared emergency plans and has also sought a compromise to safeguard winter supplies in a potential deal that would guarantee Kiev at least 5 billion cubic metres of Russian gas for the next six months if Ukraine made pre-payments.
Russia’s energy minister said on Tuesday he hoped to reach a deal in a gas dispute with Ukraine this week, although he added that Kiev must pay some of its large debts before Moscow resumes gas supplies.
Yet even if a deal is reached, analysts say flows to the EU could get disrupted this winter as Ukraine did not have enough time to fill its gas reserves ahead of the cold winter months.
“There is every chance that there will be interruptions especially if the Ukrainians don’t manage to get more gas into storage because,” said Peter Hughes of German consultancy Global Gas Partners on the sidelines of the 2014 Platts European Gas Summit.
In the end, however, analysts said that all sides involved would lose if gas stopped flowing this winter.
“All parties will be losers. They don’t have anything to gain out of the situation,” said Stephane Bertoncini of Chappuis Halder & Cie in Paris.
26 Comments on "Russia-Europe Gas Game Heats Up as Winter Looms"
Feemer on Thu, 2nd Oct 2014 9:14 am
Europe needs to make a binding agreement to raise it efficiency to at least 30%. Raising it to 30% by 2030 could cut between 20-30% of Russian gas imports. A greater push for renewable energy would also decrease dependence on Russian gas and coal.
Makati1 on Thu, 2nd Oct 2014 9:56 am
Russia and China are now discussing another gas pipeline to another part of China in a deal similar to the one a few months ago. Part of the line is already in place and would not take years to hook up. http://journal-neo.org/2014/09/28/china-and-russia-in-new-strategic-energy-deals/
We live in interesting times … “Baby, it’s cold outside!” LOL
Perk Earl on Thu, 2nd Oct 2014 10:40 am
Just as a sideline from NG, here’s today’s oil price which keeps going down.
http://www.bloomberg.com/energy/
WTI 90.34
Brent 92.51
Ninety Two . Fifty One?
Plantagenet on Thu, 2nd Oct 2014 10:49 am
Europe made a decision to tie itself to Russian gas. Now it has to live with it.
GregT on Thu, 2nd Oct 2014 4:20 pm
Mankind made the decision to rely completely on one finite key resource. As that resource becomes more expensive and less available, we are all going to have to learn to ‘live with it’, or perhaps more appropriately, live without it.
J-Gav on Thu, 2nd Oct 2014 5:05 pm
From my perspective, it’ll be ‘interesting’ to see what my gas bill looks like this winter, especially if it’s a cold one here in France … Only a few regions have been severely bitten here over the last few years but that could change on a dime, couldn’t it?
Perk Earl on Thu, 2nd Oct 2014 5:44 pm
Going to be a lot of people layering clothing inside this winter, used as shivering pawns in a political power game, with the TPTB not far from massive fireplaces running on NG.
eugene on Thu, 2nd Oct 2014 6:13 pm
The interesting thing for me is the world stage ie Europe caught between ties with the US and gas out of Russia. I figure back door deals including US “promises” of some sort. The bankrupt guy next door handing out IOUs. How things have changed since my childhood.
ghung on Thu, 2nd Oct 2014 6:40 pm
The UK and EU are in the awkward position of having to import a big chunk of their energy, whatever form it’s in. Some folks in Germany figured that out a while ago. The US and Canada use most of their natural gas, and nobody is going to build a pipeline to Europe. Seems the EU have a choice between making a deal with Russia or toughing it out with locally viable renewables and expensive LNG/coal (nukes being on hold). The continent can adapt to renewables, but Putin is a moving target. I, personally, wouldn’t want Putin to have me by the energy balls.
dissident on Thu, 2nd Oct 2014 8:01 pm
Yeah, big bad Putin and his natural gas sold for much less than Norway. I guess the shenanigans from the clowns in Ukraine over the last few years just don’t figure in this whole discussion. It is always about Putin and Russia.
Good to see Russia finally giving all the haters in the west the middle finger. You are not the center of the universe, no matter how much you pretend to be.
steve on Thu, 2nd Oct 2014 9:07 pm
Well I don’t think you can rule out that this won’t be the start of WW3…..the U.S is acting in the best interest of the deep state that controls it…I wouldn’t be surprised if the price of oil is being manipulated right now to starve Russia….dirty, dirty, games being played on all sides….so sad…It is complete ignorance to argue one side in favor of the other….
Northwest Resident on Thu, 2nd Oct 2014 9:10 pm
They’ll all come crawling to Putin on their frozen hands and knees, ice sickles hanging from their gnarly noses, by the time this is all over. He who controls the fossil fuels controls everything, and Putin/Russia are looking pretty good right now.
Davy on Thu, 2nd Oct 2014 9:11 pm
Dissy, chill man, G has a point. “IF” Europe submits to Putin and his energy arm twisting then they are slaves and pawns of one man’s ambitions. Putt has the right to play this game against the west because the west had the gall to interfere in Russia’s playroom. Power corrupts terribly and we can be assured the richest man in the world is morally and spiritually corrupt to some extent. You just don’t get to Putt’s position and not be tempted by power lust. Putt has just not attained his Phoenix desire of the old USSR. He wants the control of his neighbors like USSR had but this is a different world now. He may almost get there but not before BAU crashes and burns with Putt being a player in that crash
steve on Thu, 2nd Oct 2014 9:40 pm
It always makes me wince when I hear how the U.S is using all of its natural gas and then I see a magazine of a mountain house 10,000 square ft full of windows and outside heaters and heated driveways…bullshit….when the shtf the wealthy will be brought to trial…
Perk Earl on Thu, 2nd Oct 2014 10:23 pm
“You just don’t get to Putt’s position and not be tempted by power lust.”
Exactly. The soft hearted go along with the flow type people rarely get to the top of leadership, especially in Russia.
Makati1 on Thu, 2nd Oct 2014 10:26 pm
About oil, but a bit off subject.
“… If the US President were genuine about his concern to contain a public health emergency, he could look at the example of that US-declared pariah Caribbean nation, Cuba. Reuters reports that the Cuban government, a small financially distressed, economically sanctioned island nation of 11 million people, with a national budget of $50 billion, Gross Domestic Product of 121 billion and per capita GDP of just over $10,000, is dispatching 165 medical personnel to Africa to regions where there are Ebola outbreaks. Washington sends 3,000 combat troops. Something smells very rotten around the entire Ebola scare.”
http://journal-neo.org/2014/10/02/and-now-ladies-an-gentlemen-obama-s-war-on-ebola/
Just ‘coincidence’?
Makati1 on Thu, 2nd Oct 2014 10:29 pm
Oh, and the oil part: “…One striking aspect of this new concern of the US President for the situation in Liberia and other west African states where alleged surges of Ebola are being claimed is the presence of oil, huge volumes of untapped oil…”
Now who could have guessed? A bio attack on the eastern oil fields of Africa? Send in the military ‘aid’ and then take over the oil. Piracy by another name.
ghung on Thu, 2nd Oct 2014 10:58 pm
Yeah, dissident, what Davy said. I’m not making moral judgements here; it is what it is. Assigning blame doesn’t put gas in the pipelines; it’s just business and foreign policy. The people who may get cold this winter won’t care much about NATO expansions or Putin’s judo. When your important energy sources become problematic, you better make other arrangements.
clueless on Fri, 3rd Oct 2014 1:40 am
America will always make an appearance without an invitation to any OIL party it smells from afar, equipped with either a bomb or some kind of virus to make the party more alive…and all she needs is her Porsche and some gas to get there, but takes home the buffet table plus it’s sumptuous food, and send home the band unpaid and hungry guests crying.
USA is a GATECRASHER and a PARTY POOPER!!!!
LOLOLOLOLOLOLOLOL
antiwarforever on Fri, 3rd Oct 2014 3:16 am
The price of domestic natural gas in France increased a whooping 3,5% on october 1st. Of course French mediacracy hushed cautiously the fact that it is linked to the ukrinian crisis.
Davy on Fri, 3rd Oct 2014 8:17 am
The Clue Solo is back in the saddle along with Yoda Mak. Yoda Mak is barking a wacky piracy theory of a US funded Ebola aid program giving west Africa Ebola for oil. Clue Solo is passing the usual anti-US gas. Where is Noob Skywalker? Noob will crow something hateful soon joining the howl of hate. May the dark force be with you.
clueless on Fri, 3rd Oct 2014 8:28 am
Davy, Truth really is stranger than Fiction… unfortunately.
Davy on Fri, 3rd Oct 2014 8:48 am
You guys smell that smell? It smells like cat piss. You just can’t get rid of that smell. Ohh, Clue solo must be near. He wiffs of cat piss just like yoda mak and noob skywalker.
Kenz300 on Fri, 3rd Oct 2014 11:14 am
Every country needs to develop a plan to become more energy self sufficient.
Looks like Germany is well on its way…… the rest of Europe needs to follow.
——————-
German Renewables Output Tops Lignite
http://www.renewableenergyworld.com/rea/news/article/2014/10/german-renewables-output-tops-lignite
MSN Fanboy on Fri, 3rd Oct 2014 12:00 pm
You must realise, your star wars refrences are all ‘good guys’…
you just complimented them.
Kenz300 on Fri, 3rd Oct 2014 9:15 pm
Japan was able to shut down 50 nuclear energy plants and the economy is doing just fine. Energy conservation, fuel efficiency, and a transition to safer, cleaner and cheaper alternative energy sources has made a difference. Now Europe just needs to wake up and realize that Russia is not a reliable partner and move on……….
E-Bike Sales Are Surging in Europe – NYTimes.com
http://www.nytimes.com/2014/08/19/business/e-bike-sales-are-surging-in-europe.html?emc=edit_th_20140819&nl=todaysheadlines&nlid=21372621