Is Russia choking Europe amid gas crisis?
The Yamal-Europe pipeline, which usually brings Russian gas to Europe, reversed its flow last week, adding pressure to an already tight European gas market as winter demand peaks.
Instead of flowing to Europe, where energy prices are skyrocketing as a result both of the cold and restricted global supply, gas has been flowing east into Poland and Ukraine. Moscow has denied accusations by some European officials that it has cut the supply, saying instead that it was German firms that were responsible for such a development.
- What is Yamal-Europe?
The transnational pipeline transports significant quantities of natural gas from the Yamal Peninsula in the Russian Arctic to Poland and Germany via Belarus. Its total length is over 2,000 kilometers (1,243 miles). Construction began in 1994 and, in 2006, it reached its annual capacity of 32.9 billion cubic meters (116.2 billion cubic feet) after the last compressor station was brought into commission.
- Who owns the pipeline?
Russian energy giant Gazprom is the system’s sole operator in Russia and Belarus. The portion in Poland is owned by EuRoPol Gaz, a joint venture of Gazprom and Poland’s PGNiG. The German section is owned by Wingas, a subsidiary of Gazprom and one of the largest natural gas providers in Europe.
- What deal does Russia have with Poland?
A long-term agreement between Gazprom and Poland on the transit of gas through the pipeline ended last year. Since then, Gazprom has booked short-term transit capacity via auctions. However, it stopped booking capacity for exports via Yamal since December 19 due to the lack of applications for the supply of “blue fuel” from European customers.
- Why is gas flowing in reverse?
As the pipeline saw shipments halted last week, physical flows of gas were diverted eastward to Poland. This is the only fact that both Russia and European countries agree on. As to why, the reasons are murky.
- What is Europe’s position?
Some European politicians have claimed that Moscow is deliberately withholding energy supplies to force the EU, and Germany in particular, to certify the launch of the recently completed but as-yet-unapproved Nord Stream 2 pipeline.
- What is Moscow’s reaction?
The Kremlin has repeatedly denied allegations it is using energy as a political weapon. Gazprom says it continues to fulfill its contracts. Russian President Vladimir Putin said last week the reversal was because of a lack of requests from buyers. He accused speculators in Germany of reselling Russian gas at higher prices to Poland and Ukraine instead of relieving the overheated market. According to Putin, Russia has been “sidelined” by Poland when it comes to managing the pipeline and Europe had only itself to blame for the soaring prices.
- Why is there an energy squeeze?
The global energy market is facing a supply crunch amid a sharp recovery in Asian demand as the world economy recovers from last year’s Covid-related slowdown. This has resulted in a shortage of liquefied natural gas (LNG) capacity because higher energy prices in Asia have contributed to the shortage of supplies to Europe. The situation was aggravated by both the start of the winter season and the low reserves in European storage facilities. While Russia has increased gas exports to Europe compared to last year, European countries have not booked additional supplies. Thus, Russia is delivering only contracted volumes.
- What’s the solution to the crisis?
One solution for Europe would be to outbid Asia and pay more for LNG imports from the US and the Middle East. Moscow’s suggestion is to access Russian gas by approving Nord Stream 2, which promises to make gas supplies cheaper and more reliable because it directly connects Russia to Germany, bypassing third countries.