OPINION: Russian President Vladimir Putin appears to have rubber-stamped a plan by Gazprom to play hardball with European gas buyers over their less than whole-hearted support for his cherished Nord Stream 2 export scheme.
The pipeline is arguably designed to allow Gazprom to halt gas flows across Ukraine, a country Putin believes is a historic part of Russia, but which remains stubbornly independent, bolstered by US support and revenues derived from gas transit fees paid by Moscow.
Unseasonably tight supply in Europe has meant less gas has gone into storage, so when demand rises in winter, buyers are likely to turn to supplies through the controversial Nord Stream 2.
European spot gas prices topped $500 per thousand cubic metres this month and, with Nord Stream 2 coming on stream, buying gas for storage looks to be a much riskier venture than usual.
With only September and October left to accumulate reserves, there have been persistent reports that Gazprom has been limiting gas supplies to the continent from Russia and also selling gas from European storage facilities under its control.
Data from European transmission operators indicates that the state-controlled monopoly reduced gas sales to Europe via Poland and Ukraine this year, despite reporting record increases in production and exports between 1 January and 15 August.
Gazprom said production rose 48.6 billion cubic metres to 316.5 Bcm compared with a year earlier, while exports increased by 21.8 Bcm to 123 Bcm. However, it refused to provide a country-by-country breakdown, avoiding independent verification of its data.
If liquefied natural gas imports and deliveries from half-empty storage facilities are insufficient to meet the coming winter’s energy demand in Europe, then — just as Putin and Gazprom chairman Alexei Miller want — Gazprom will be there to offer deliveries via the much-maligned Nord Stream 2, proving the pipeline’s importance to the continent.
The European Commission has the authority to investigate and rein in Gazprom’s anti-competitive and coercive practices, just as it did in the past.
The commission should not wait for winter to bite before taking pre-emptive action against the company, but time is running out.
(This is an Upstream opinion article.)