L‘Europe is entering winter, and the question is no longer whether it will have gas to heat itself and run the factories, but at what price. It has ignited in recent weeks and costs six times more than a year ago. The bill for individuals and manufacturers will be heavy in 2022. The functioning of the European market lends itself to this, as does the economic context: demand is strong during this season, activity remains strong despite the threat of the Omicron variant of SARS-CoV -2, storage is at a very low level (63%) and the unexpected shutdown of French nuclear power plants is increasing tensions.
If there were only that… The prices of gas, and by extension those of electricity, are also evolving against the backdrop of the noise of Russian boots on the eastern borders of Ukraine. Russia supplies a third of the needs of the European Union (EU). This share, greater than that of Norway and Algeria combined, puts Vladimir Putin in a strong position to derive double benefit, financial and political, from the situation. The Russian president has been playing this market power for months by asking Gazprom not to export more than expected by its contracts with European customers.
Strengthened links between Moscow and Beijing
A project crystallizes tensions with the Twenty-Seven, who say they are ready to charge a “Huge price” to Russia in the event of Ukraine’s aggression: Nord Stream 2, a 10 billion euro pipeline financed by Gazprom (50%) and five European energy groups, including the French Engie. 1230 kilometers long, it must carry Russian gas to Germany via the Baltic Sea, thus avoiding countries of the former Soviet bloc (Ukraine, Poland, the Baltic countries) which have become members of the EU or attracted in the western orbit.
This energy corridor, completed in September, can deliver 55 billion m3 of gas per year, almost two-thirds of German consumption. Its commissioning was suspended across the Rhine by the energy regulatory authority for non-compliance with European law. It will wait until summer at best, and may be postponed indefinitely by Europe in the event of military escalation – including with political support from Berlin. Such a decision by the new coalition would decide on the position of Angela Merkel, who had supported Nord Stream 2 tooth and nail in the face of pressure from Donald Trump and several Eastern European countries.
Joe Biden finally gave the green light to launch pipeline by waiving sanctions “In the interest of the United States”. He now admits having gone too quickly, since his blockage is now presented in Washington (and Brussels) as a priority response to any Russian adventurism. With what chances of success? Until now, the freezing of assets, the blacklists of businessmen and banks, the ban on the use of the dollar or the embargo on petroleum equipment decided upon following the annexation of Crimea in 2014 handicapped Russia, without bringing it to its knees.
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