Monday, November 1st, 2021
Russia is throttling deliveries
Gas price shoots up
For months, gas prices have only known one direction: they are rising sharply. Now an important Russian pipeline is drying up – and prices continue to rise.
While Gazprom and the EU are arguing about the operating permit for the Nord Stream 2 pipeline, Russian gas supplies through an important pipeline are drying up. According to the data at the measuring point in Mallnow, Brandenburg, no more natural gas has flowed through the Yamal pipeline, which runs from Russia through Poland, since Saturday. Against this background, the gas price is rising sharply: the European futures contract is 15 percent more expensive to EUR 74.35 per megawatt hour.
It is unclear why no gas is flowing. The Kremlin-controlled gas company Gazprom could not initially be reached for comment. The interruption of the delivery takes place against the background that Russia is accused of deliberately throttling the gas supply for weeks in order to put the EU under pressure.
The Nord Stream 2 pipeline has already been completed and is to pump Russian natural gas directly to Germany via the Baltic Sea. However, gas transport is currently not permitted because certification from the Federal Network Agency is still pending. The authority checks whether the operation of the pipeline and sales are sufficiently separated as provided for by the EU gas directive. According to the Bonn authority, this is an administrative procedure and not a political one.
But even if the Federal Network Agency should give the green light, not all hurdles have been cleared. The current EU gas directive regulates that a review by the European Commission must be carried out before final certification. The Brussels authority may allow up to four months for this and the final statement. Only then can the final decision be issued by the national regulatory authority. The EU Commission will probably exhaust the deadline for drafting the opinion, also because the political pressure from opponents of the pipeline is great.
Russia’s most important gas supplier
Gazprom rejects the accusation that it does not adhere to the supply contracts it has concluded. According to critics, however, the group could deliver more gas to the EU than before. At the end of last week, Russian President Vladimir Putin ordered the European gas storage facilities in Germany and Austria to be filled – but only after their own storage facilities were full. Gazprom boss Alexei Miller said that should be the case next Monday.
Russia is Germany’s most important source of natural gas. The Federal Ministry of Economics has not published any figures on gas imports broken down by country of origin since 2016. According to the Energy Information Service, the Federal Republic of Germany’s 2020 imports of natural gas, after deducting natural gas exports, totaled 79.244 billion cubic meters. In addition, there were 5.155 billion cubic meters of domestically produced natural gas.
According to this, 37.23 billion cubic meters came from Russia and thus around 44 percent of the natural gas consumed in Germany. Another 42 percent came from Norway, 6.5 percent from the Netherlands.