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Page added on January 13, 2015
Why Europe no longer fears the Russian gasman
A MILD winter and robust European Union policy have blunted the edge of what was once Vladimir Putin’s most effective foreign-policy weapon: the politicised export of gas. Contrary to some expectations, Russian gas has been flowing to Europe across all four main export pipelines this winter, while the Kremlin’s flagship new pipeline project, South Stream, has come to a mysterious and embarrassing end. Now the focus is on the EU to see if it will push ahead with the prosecution of Gazprom, Russia’s main gas exporter, for years of anti-competitive practices. Why has Russia lost its hold on European gas?
European policymakers still remember the shocks of 2006 and 2009, when Russia cut gas supplies to Ukraine amid a row about prices and debts, leading to heating crises and factory closures in countries such as Slovakia and Hungary, and making western European countries such as Germany scramble to find alternative supplies. Europe gets a third of its gas from Russia, half of it from pipelines across Ukraine. Politicians decided that Russia’s grip on gas supplies to countries in the east of Europe gave the Kremlin an alarming political leverage.
Since then the EU has made some big changes. It pushed through a controversial but effective liberalisation of the gas market, known as the Third Energy Package: Russia cannot now both own and control pipelines on EU territory. The EU has has also made the supply system a lot more resilient, putting taxpayers’ money into new interconnectors between countries dependent on Russian gas imports. This rewrites the rules. If supplies from the east are interrupted, the countries affected can import gas from elsewhere. As of December, Lithuania, once 100% dependent on Russian gas, is importing liquefied natural gas (LNG) from Norway. Ukraine’s gas imports from the west are rocketing. The EU has also brokered a deal on debts and prices between Ukraine and Russia, which should keep the gas flowing at least for the first quarter of 2015. Moreover, a mild winter means Europe’s gas consumption is low and storage is high for the time of year. Even if Russia did try to interrupt supplies, the effect would be modest.
In fact, Russia has other worries. The low oil price is straining the Kremlin’s coffers. In December, Mr Putin abruptly cancelled the $40 billion South Stream pipeline to central Europe via the Black Sea and Balkans after it ran into trouble. The EU is likely to put pressure on Croatia to open an import pipeline and LNG terminal on the Adriatic coast. And the EU has yet to fire its biggest weapon against Russia: a colossal “complaint” based on a multi-year investigation into discriminatory pricing and other market abuse dating back to 2004. That could lead to legally mandated changes in Gazprom’s business model and whopping fines. The investigation was masterminded by the previous competition commissioner, Joaquín Almunia, but postponed last year for political reasons (amid war in Ukraine, the EU feared worsening ties with Russia). Now the fate of the Abominable Gasman lies with Mr Almunia’s successor, Margrethe Vestager.
55 Comments on "Why Europe no longer fears the Russian gasman"
rockman on Tue, 13th Jan 2015 6:05 am
“This rewrites the rules.” IMHO I don’t think the rules have changed. The EU economy is still dependent upon Russian NG. Russia will restrict those sales when it’s beneficial for it to do so. That primary rule hasn’t changed. But at the moment, it isn’t beneficial for them to do so: thanks to the drop in oil prices Russia’s economy is more dependent then ever before on its NG exports. The EU has nibbled around the edges of Russia’s choke hold on them but hasn’t changed the playing field to any significant level IMHO. The collapse in the price of oil has done that.
The EU can certain thumb its nose at Russia today. But one thing we know for sure: Russians never forget and never forgive.
Davy on Tue, 13th Jan 2015 6:58 am
Well put Rock and I am in total agreement.
Adrian on Tue, 13th Jan 2015 7:22 am
“Russians never forget and never forgive” neither the East European countries
Makati1 on Tue, 13th Jan 2015 7:42 am
The Economist, sponsored by GE… the MSM Iron Curtain’s best example of propaganda.
Nothing has changed in the EU. Putin still holds the economy of the EU in his hands and can strangle it anytime he wants to, and will for years to come no matter what any propaganda rag prints.
Amvet on Tue, 13th Jan 2015 7:45 am
Peakoil disgraces itself by publishing an article from the political rag, The Economist. Among the disinformation in the article. The US waged a long war to convince the EU to distrust Russia and to damage Russia as much as possible. So, the EU wrote laws directed at Gazprom and supported the US managed bloody coup that put in a rabid anti-Russian Ukrainian government chosen by our Victoria Nuland and our ambassador in Kiev. Yes, we have damaged Russia but we have damaged the EU more which is fine with the Economist and was part of the US plan.
Waterworld oil bigot on Tue, 13th Jan 2015 7:50 am
quote “Russians never forget and never forgive”..
Are you talking about the Russia now Or the Russia in a few years from now?
I wonder how Russia will look like by that time…
when the Russian people wake up that is!
Amvet on Tue, 13th Jan 2015 7:52 am
Did anyone read the UN report that our guys in the Ukraine have killed a few thousand of Russian speakers with long rang artillery, white phosphorus, and military aircraft? Burned a building full of Russian speaking demonstrators? That over one million were forced out of their homes and over 400,000 fled to Russia for safety? To rub salt in the Russian wound the EU insults Russia.
sergei on Tue, 13th Jan 2015 7:59 am
Why Europe no longer fears the Russian gasman -but consumes just as much.
Jacklyn Denise on Tue, 13th Jan 2015 8:40 am
Europe no longer fears the Russian gasman and that’s why they’ve called for emergency consultants with Putin after the cancelling of South Stream. This is just another in a long line of propaganda reports designed to make the public feel better about EU/US failed relations with Russia.
Its on Tue, 13th Jan 2015 9:07 am
LOL..You have to be kidding right? First if this article claims to know so much about Russian oil please explain to the readers the type of fuel…exact chemical processing refinery blend that the EU uses? go ahead ill wait>>>>>You see the Russian blend is a different refined blend than the majority of the world uses that is why it cant easily be replaced by just anyone…so if what you lie about makes sense the economy of the EU today which is in recession …basically broke..would totally collapse if Russia today said we will cut you off no more oil. You people are Zionist clowns in a Puppet circus not credible journalists.
Alexander Argentina on Tue, 13th Jan 2015 10:24 am
One individual at the mass rally in Paris said that ‘…we will not allow any outside influence to dictate to us.’
It is strangely similar to what many Syrians have been saying for several years.
radon1 on Tue, 13th Jan 2015 10:39 am
“Europe no longer fears the Russian gasman” – So what? Why the Russian gasman should be upset with Europe being happier?
J-Gav on Tue, 13th Jan 2015 10:46 am
“Lost its hold on European gas?”
“Because we’re having a mild winter?”
Euh, the winter isn’t over yet, in case the people at the Economist haven’t noticed, and then, unless I’m mistaken, there will be ‘next winter’ …
rockman on Tue, 13th Jan 2015 10:49 am
Waterworld – I get the implications. My comment is directed at the current power structure. They are the remnants of the Cold War. But if you’re referring to the younger Russians I have no doubt they’ll hold a different mindset.
But at the moment Putin et al are in charge and those younger attitudes have no stroke today or in the short term. Maybe 10 to 20 years from now we might see a shift. The only potential shift I see from Putin now is from bad to worse.
Apneaman on Tue, 13th Jan 2015 11:27 am
Amvet, I’m aware that the US state department helped manufacture the current conditions in Ukraine, but they did not need to send any assassins to do the dirty work. Ukraine has been a hate filled basket case for a long time. The Nazi’s there are not neo; they have been there from the inception of that religion of hate. I hear so many assured theories and opinions on that part of the world from westerners and it is obvious to me that most of them have no clue as to the relevance of the extremely long and complicated history/back story. Simply reading a few short zero hedge and Dimitry Orlov articles does not cut it. I have a personal connection to that back story because my Baba and Dido, escaped the communists just in time to avoid being victims of The Holodomor. A majority of their family (mine too)and friends could not escape and were killed through starvation and disease or were shot along with millions of others. I would not be alive if they did not flee. I would be surprised if anyone can find Orlov ever mentioning The Holodomor. He knows and gets a lot right, but he lies by omission. More Ukrainians died in The Holodomor than the Jewish Holocaust, yet most people have never heard of it and I have yet to hear it mentioned by the western press since the mess in Ukraine started. One would think it would make for useful propaganda. Very curious that the PTB are not using it. Very curious.
http://en.wikipedia.org/wiki/Holodomor
Laci on Tue, 13th Jan 2015 11:27 am
Writer of this article is absolutely clueless. Liberalization of the EU gas market did nothing to provide more gas. Meanwhile, North Sea gas production that provides about 40% of EU gas is set drop by about half by 2030. The fiasco in Ukraine is causing Russia to reorient its focus on selling gas to Asia and the EU is only able to secure small crumbs such as 10 bcm per year from Azerbaijan.
I think the EU will become the Nr.1 customer for more expensive LNG and as it will take a big bite out of an already stagnated economy, the EU will look back with nostalgia at the time when it used to have a decent relationship with Russia.
Davy on Tue, 13th Jan 2015 12:17 pm
Laci, Russia has little future as the EU has little future. Neither one can accomplish a decouple. We currently see how useless oil and gas are to an economy when dependence on oil and gas income leads to crisis with falling prices. Soon global BAU will be starved of economic value by depleted oil resources. Russia, China, EU, And US are going to fall together. What shakes out when and how is open for debate but the trend is obvious.
ghung on Tue, 13th Jan 2015 12:31 pm
FYI: PBS/Frontline tonight: “Putin’s Way”: Tracing the career of Russian Prsident Vladimir Putin over two decades.
Check local listings. Should be informative.
Rodster on Tue, 13th Jan 2015 12:36 pm
“Russia has little future as the EU has little future. Neither one can accomplish a decouple.”
“Soon global BAU will be starved of economic value by depleted oil resources.”
“Russia, China, EU, And US are going to fall together.”
QFT !
I’ve been saying that for years. The economic Ponzi scheme is global. ALL nations and economies are tied to the hip. It used to be when the US sneezed everyone caught a cold. In today’s environment when anyone sneezes someone catches a cold.
The global economic system is like Leonardo’s Stick Toy. Remove one or two sticks and it all collapses. And I don’t care what anyone says, Gold or Silver ain’t saving anyone.
Industrial civilization..over, back to the Dark Age.
Asamatteroffact21 on Tue, 13th Jan 2015 12:47 pm
Good article – the news about Europe’s third energy package is old but it was essentially ignored at the time – in fact it scared the Russians and set off a whole chain of events including those in Ukraine (before that in Slovakia, Bulgaria, etc).
Russian trolls will get their 5 rubles a post here – from what I read in the comments section
Davy on Tue, 13th Jan 2015 12:50 pm
Rod, I would like to ask these cats that talk about collapse in a vacuum whether U.S. or Russia for example if demand is hurting commodity prices now WTF is going to happen when a major economic entity stops working. I think we all can use common sense and figure that one out.
We can’t split sheets without a dangerous divorce. All countries are in danger of any other failing especially the significant economies. This is just plain obvious but if it is so obvious why all the collapse talk in a vacuum? I am talking from top to bottom. I am just amazed how a world can be so short sighted.
Davy on Tue, 13th Jan 2015 12:52 pm
G-man, thanks for the frontline mention. That Putin documentary is a must watch for me. For me Putin is an amazing leader. IT does not matter good or bad he is at the top of importance in the world now regardless of your opinion of him.
Rodster on Tue, 13th Jan 2015 1:09 pm
” All countries are in danger of any other failing especially the significant economies.”
Just look at all the nervousness and ramifications about a little insignificant country like Greece exiting the EU.
Can you imagine what will happen when the SHTF and a major economy in the East or West, fails?
Hell back in 2008 Grodon Brown was on record to bring in troops to quell the unrest and chaos in 2008 if the Federal Reserve had not backstopped the entire global economy. Hank Paulson was about to declare Martial Law in the US. China is a basket case and it has to worry about 7.2B becoming restless and agitated. The entire global economy is one giant eggshell.
Markymarknyc on Tue, 13th Jan 2015 1:39 pm
There are a lot more pressures on Russia than that. Liquid Natural Gas can be sources from
Qatar
Algeria
Norway
Australia
Within a year the US will have export terminals up and running
If Europe chooses to build more LNG terminals around the periphery of the EU in addition to the new one in Lithuania then Russia is going to lose almost all of its leverage.
If Ukraine starts exploring its own reserves using Fracking then Russia will lose a $8B export market right there.
Finally, if the west buries the hatchet with Iran (who now look less dangerous than Russia) then they could run a pipeline across Turkey to the EU and cut Russia out of the game altogether and they certainly deserve it.
Russia should never have tried to use energy as a bargaining chip, especially followed by invading neighboring countries. Prudence dictates that you manage your risk by diversifying your energy sources.
They made their bed and now they will have to lie in it.
Spec9 on Tue, 13th Jan 2015 1:52 pm
Europe has also built more of their own energy infrastructure. Solar Power, wind turbines, hydropower, biomass, nukes, etc. Keep on building more!
Dredd on Tue, 13th Jan 2015 3:26 pm
“Why Europe no longer fears the Russian gasman”
This article grasps and forces all of Europe into one entity.
First dumb mistake.
Then uses an f-word “fears” as a hysterical addition to nonsense.
Rah, rah, rah shish boom bah!
IOW, a lava like flow of deep propaganda bullshit.
J-Gav on Tue, 13th Jan 2015 5:10 pm
Yes, Apnea, death by starvation under Stalin in Ukraine couldn’t have been much fun. Part of my wife’s family comes from there. Only managed to escape, aided by sympathetic locals, by giving ‘porno’ pictures to the Red Army soldiers who came to confiscate their farm.
dissident on Tue, 13th Jan 2015 5:24 pm
Since someone brought up the Holodomor, let’s have at it. The whole of western Ukraine, where most of the Ukrainian-speaking and Russia hating Ukrainians live, was part of Poland between 1920 and 1939. So they did not live through Stalin’s forced collectivization famines.
But the people of the Donbas in eastern Ukraine did live through a real Holodomor. Now the western Ukrainian scum is shelling them in the name of Holodomor and making up all sorts of childish revisionist history.
Davy on Tue, 13th Jan 2015 5:37 pm
http://commons.wikimedia.org/wiki/File:Rzeczpospolita_1920_captioned.png
Disssy, what about the central part? I guess they don’t matter.
sjn on Tue, 13th Jan 2015 5:43 pm
The agricultural collectivism policy under Stalin was USSR wide, and unfortunately coincided with a poor harvest. It was poorly concieved and executed, millions died. The idea that it was a deliberate act of genocide by Stalin (or ethinic Russians) against the Ukrainian people is just contemporary nationalistic mythology.
It was an awful event for those who suffered through it, and for those who had to live with the consequences, no doubt about it, but it’s been twisted and manipulated to be used as a propaganda tool which is to a significant degree illicting the hate that is driving the current conflict.
dissident on Tue, 13th Jan 2015 5:55 pm
http://www.bloomberg.com/news/2015-01-12/eu-seeks-to-discuss-south-stream-gas-project-with-russia.html
So the EU is “free” from the Russian gas man is it now.
Maybe the EU can apply sanctions to Russia to force it to restart the South Stream project.
Apneaman on Tue, 13th Jan 2015 6:42 pm
Hey asshole. You obviously just saw the word Holodomor and instantly followed that voice in your head that tells you your a expert on everything and everyone must know about it. My comment about my grand parents experiences was in no way a declaration for either side in the Ukrainian debacle. Other than them and a few other immigrants I never met anyone from there and they have all been gone for decades. The only sympathies I have are for the everyday people caught in the cross fire. Try slowly reading others words before commenting or just fuck off altogether.
Makati1 on Tue, 13th Jan 2015 6:45 pm
Lots of BS in the article and some in t he comments.
PBS is another propaganda outlet for the Empire. You might also watch CBC’s:
“Vladimir Putin Full Length Documentary: The Putin System” 1hr 27 min. Youtube.
https://www.youtube.com/watch?v=m5Rkom1RpKA
The man is now the most powerful in the world as he holds the reigns of all that the West wants … and has the nuclear button under his thumb. All the ranting about Russia ‘s suffering is only leftover Western Cold War hate and wishful thinking, not reality. The China/Russia union has the Empire pissing down it’s leg…
peakyeast on Tue, 13th Jan 2015 6:52 pm
By the way: Margrethe Vestager is pretty much hated in Denmark where she leaves her post as minister before time – but after a reign of terror against the poor in the population.
She is absolutely corrupted by power and greed.
dissident on Tue, 13th Jan 2015 7:45 pm
Apeman, anyone using the revisionist term Holodomor is an obvious shill. Tell me more how all the Ukrainians starved to death and the Russians moved into squat their lands in the Donbas.
Davy on Tue, 13th Jan 2015 10:04 pm
Frontline served Putt up for dinner. Nothing new per my comments from the past of Puttin as the grand gangster of Russia. This was a powerful documentary of corruption as I have seen.
With that said it is a pitty more was not said about the awful situation in Ukraine and the central role the U.S. played. This would have been a counterbalance to this blistering of Czar Putin. Since this documentary was so anti Putin I have to lower my marks for truth and justice. Not because I think anymore of the criminal Putin but because the crimes on the otherside are a greater danger to world peace. The U.S. and others should not be provoking Russia on her borders especially with a leader like Putin that does not back down.
dissident on Tue, 13th Jan 2015 10:10 pm
Nice to see your dutiful propaganda report. You can go to bed now that you are safe and secure in your “facts”.
Any show that uses Boris Berezovsky associates as truthful sources of information is just demented. Go read “Godfather of the Kremlin” by Paul Khlebnikov. Khlebnikov was murdered for this excellent work. Of course the western media blames Putin.
Davy on Tue, 13th Jan 2015 10:24 pm
Poor Dissy has issues with anything Dissy world view critical. I love when his type gets their panties in a wad.
ghung on Tue, 13th Jan 2015 10:30 pm
I just watched the Frontline: “Putin’s Way”: Tracing the career of Russian President Vladimir Putin over two decades. It’s a quite severe indictment of Putin and his oligarchy. Enough to bump one’s doom-o-meter up a notch or two, and I’m not sure how Orlov can defend this sort of power other than to divert his anger at the corrupt West (this documentary touches on that some, their involvement with Putin, and his ability to corner so much wealth in a relatively short period).
Anyway, I’ll let others judge for themselves. It should be available online soon.
GregT on Tue, 13th Jan 2015 11:33 pm
Davy,
If I had ten thumbs, I would give you ten thumbs up, but I don’t, so you only get two. 🙂
Plantagenet on Wed, 14th Jan 2015 1:52 am
Russia is an economic basket base thanks to EU sanctions. Putin has to sell oil and gas cheap just to keep Russia afloat
Amvet on Wed, 14th Jan 2015 3:19 am
apneaman, I am familar with the statistics of Stalin´s hunger campaign in the Ukraine. I was in Kiev two years ago and visited the memorial. My wife and I did a tour from Passau to Kiev and were surprised how modern the cities were. Also we spent many hours walking in Kiev. Our Ukrainian guide was very anti-Russian and pro-US.
Davy on Wed, 14th Jan 2015 5:24 am
Thanks, Greg, coming from you that means allot considering the degree and depth of your study on the issue. I have learned allot from you on Russia, Ukraine, and the darker side of US foreign policy.
Davy on Wed, 14th Jan 2015 5:41 am
I am wondering if this Ukrainian and Russian hatred and animosity between the countries and peoples in some ways can be compared to the American Civil War. These people have so much in common with culture, history, and intermarriage. This intermarriage being macro and micro. Is it not often the case strong love and hate are so close? I find family hatred some of the strongest. The hatred of spouses in a breakup. The reason I bring this up is there can be a healing if the right actions are taken. We know the common pride of these peoples is there. These are not two different races with nothing in common.
I, like G-man, have a doom meter. My doom meter is telling me when considering the TBTF status of Russia and Europe with Ukraine sandwiched in between makes Ukraine TBTF. Both sides cannot afford a failed state in this location. We must also mention the food production of the Ukraine as important to the global food network. The transit of vital energy is here and cannot be bypassed in time to avoid disruption to something vital to the EU, Ukraine, and Russia.
If we could get the US out of this conflict I think the EU and Russia could manage a compromised settlement by strong arm economic and political means. The US has no business here economically or politically. The US has no business pushing Putin into a corner. We can play the competitive game with Russia in other more benign ways and locations. Countries have always done geopolitical brinkmanship but we don’t need to play the cold war game with so many WMD in play.
This is related to PO because it is an above ground PO dynamic for those of you wondering. I am a US flag waiver but with the flag upside down. Dooming on the subject tells me this is the top geopolitical risk for collapse. Yet, the subject has fallen off the radar screen as it simmers and festers.
Makati1 on Wed, 14th Jan 2015 7:32 am
The world would definitely be a much better place if the US just pulled into it’s borders and left the rest of the world decide their own fate, but then the US would crash to 3rd world status if it could not bleed the other countries dry to feed it’s consumption and pay it’s bills.
ghung on Wed, 14th Jan 2015 9:24 am
Mak: “…the US would crash to 3rd world status if it could not bleed the other countries dry to feed it’s consumption and pay it’s bills.”
Sort of like the way Putin and his oligarch thugs have bled Russia dry of any chance at solvency. That’s the way the world works, Mak. Do your best to get out of its way.
Apneaman on Wed, 14th Jan 2015 10:33 am
Amvet. As a curious teenager I was only given a basic story of how and why my grand parents came to Canada. Escape Communism then 2 or 3 years later the famine, many family and friends dead. Other than that it was never discussed and my father said do not talk about it because it will upset Baba. I do remember they were grateful for Canada. I still recall how only months before he died, I heard Dido say to my dad how he still could not believe that he got a pension cheque every month from the gov and one for 40 years of working for Canadian Pacific Railway too. They made him a foreman because he could speak 7 languages and thus could give orders to all the other “displaced persons” employees. He came to Canada not knowing any English, but learned to read and write it. Not bad for a refugee peasant with a grade school education.
baptised on Wed, 14th Jan 2015 11:30 am
Look at who PBS get’s it’s money from in just the last few years, Boeing, Norththurp, Koch Bros. and BNSF(huge train corp.). I think it is one of the major cotastrafies of USA’s modern times. Our PUBLIC BROADCASTING SYSTEM has been bought. Hurry MIC.
dissident on Wed, 14th Jan 2015 4:34 pm
http://www.cbc.ca/news/canada/montreal/ex-mcgill-hospital-boss-arthur-porter-arrested-in-panama-1.1302252
Oh no, Canada is a corrupt toilet!
Makati1 on Wed, 14th Jan 2015 6:54 pm
ghung, last time I looked, Russia did not have 800+ military bases around the world, or was intervening in sovereign countries governments all over the world. You need to learn some Russian history without the Western spin. Our own government makes Putin and Russia look like saints.
We have the torture prisons now.
We have the Police State.
We sponsor death by proxy all over the world.
We kill wedding parties and go “Oops!” We shoot down commercial airliners and try to blame Russia without giving proof.
The list goes on and on and on.