Russian state-controlled gas monopoly Gazprom has continued to reduce gas deliveries to Europe in the first half of January, providing no public explanation of its continuing to cut supplies amid high winter demand.
Gazprom gas deliveries via the Nord Stream subsea pipeline and trunklines across Ukraine and Belarus traditionally provide most of Europe’s gas imports.
However, the company’s daily disclosures show that volumes fell to an average of 250 million cubic metres per day in January.
This appears to be the lowest volume Nord Stream came online in 2011, with deliveries via the Yamal Pipeline to Poland close to drying up completely.
Supplies via the three routes ran at an average of 434 MMcmd of gas in the first half of January 2021.
Gazprom reported exports to Europe of 370 MMcmd last December when European gas spot prices peaked at more than $2000 per thousand cubic metres as underground gas storage levels reduced rapidly.
Such previously unseen price levels triggered some liquefied natural gas carriers en route to Asian destinations to divert to Europe, as well as additional US LNG deliveries to Europe.
Although gas spot prices dropped to below $1000 per thousand cubic metres in January, International Energy Agency (IEA) executive director Fatih Birol warned in his social network article earlier this week that “timeliness [of LNG supplies to Europe] is limited by longer transportation times than for pipelines”.
“Lower than average gas inventory levels [in Europe] — around 50% full as of early January, compared with an average of nearly 70% over the past decade — create further security of supply concerns, especially in the event of late winter cold spells,” Birol warned.
Gazprom has not responded directly to continued accusations in Europe about its role in the energy crisis, releasing only a short statement to Russian state news agency Tass that the company “provided some requested responses” to a questionnaire that the European Commission sent earlier this month to a number of energy suppliers on pipeline gas deliveries.
European Commission inquiry
European Commissioner for Competition Margrethe Vestager was quoted by Reuters as saying that limiting supply, while demand increases “is quite rare behaviour in the marketplace”.
Gazprom said previously that it has been fulfilling all gas deliveries under its long-term supply contracts with European customers and has not received requests for additional volumes above contractual thresholds.
While Gazprom controls two of its five long-term offtakers in Germany — its largest market in Europe — one of its key customers, Uniper, has acknowledged an unprecedented financial strain on operations because of margin calls to cover its long-term gas trading hedges.
Requirements to deposit more funds under hedging agreements for Uniper, and another of Gazprom’s German customers, Wintershall Dea, followed the gas spot price’s repeated record highs in the second half of 2021.
Talks with Russia
Some political analysts have suggested that lower gas supplies to Europe may be part of Russia’s overall strategy to persuade Nato and the US to guarantee they will neither supply weapons to Ukraine nor allow it join the military alliance.
Russian representatives have held several rounds of talks with US enjoys, Nato officials and representatives of OSCE member nations this week.
The talks were held as the Kremlin also ordered military exercises in areas close to the Ukraine border, sparking fears that Russia is preparing to invade the country.
No agreements were reached during the talks, but analysts viewed them as a positive trend, because they had involved Russia after a long period of alienation and allowed Russian representatives to voice their grievances.