“No one can give guarantees”: will European countries have enough gas reserves for the coming winter

On Monday, October 17, gas prices in Europe fell to a minimum over the past four months.

During the auction, the cost of raw materials at the TTF hub in the Netherlands decreased by 13.1% to €123.4 per MWh, or about $1,250 per 1,000 cubic meters.

m. The last time a similar value could be observed on June 21, as evidenced by the data of the London ICE exchange.

“The decrease in the exchange price for gas in the EU is largely due to the accelerated filling of European gas storage facilities.

In addition, in many countries of the region, the weather is now quite warm for mid-October, which is also reflected in the quotes, ”Natalya Milchakova, a leading analyst at Freedom Finance Global, explained to RT.

According to the latest estimates of the Gas Infrastructure Association of Europe (GIE), the occupancy of underground gas storage facilities (UGS) in the EU countries has already exceeded the target levels and now stands at 92.08%.

Earlier, the European Parliament planned to bring the figure to 80-85% by November 1.

Although supplies of energy raw materials from Russia remain limited, the EU is currently trying to maximize its purchases of fuel from other suppliers, Natalia Milchakova explained.

However, in her opinion, by the end of 2022, the cost of gas in the European market may again rise to $2,000 per 1,000 cubic meters.

m.

The possibility of another wave of rising fuel prices in Europe is not ruled out by Gazprom analysts.

According to the company's assessment, in winter, depending on the development of the market situation, gas prices in the EU may exceed $4,000 per 1,000 cubic meters.

m.

As Alexey Miller, the head of Gazprom, explained earlier, even UGSFs filled to the maximum cannot guarantee a reliable passage of the autumn-winter period.

As an example, the top manager cited the situation with gas consumption in Germany, the country with the largest underground storage facilities.

“The volume (of German gas storages. -

) is 21.5 billion cubic meters with 100% injection.

m of gas.

Germany is likely to pump about 20 billion cubic meters. According to estimates, which are based on historical data, Germany will consume 60 billion cubic meters over the coming autumn-winter period.

m of gas, maybe a little more ... This means that gas in underground storage facilities in Germany is enough for two, maximum two and a half months, ”Miller explained.

According to him, the real state of affairs will largely depend on weather conditions and the passage of the winter peak in the EU.

So, even if the coming months are relatively warm, then the sudden onset of abnormal cold weather for five to seven days can “freeze entire cities” in Europe, Aleksey Miller suggested.

“Returning to the question of whether Europe (winter. -

) will survive with the volume of gas pumped into underground storage facilities that it has today or not.

The answer is very simple - no one can give any guarantees, ”the head of Gazprom emphasized.

According to various estimates, by the end of March 2023, the occupancy of European UGS facilities may be only about 5%.

Thus, if the countries of the region still manage to survive the coming winter without significant losses, then the prospects for heating periods in 2023 and 2024 are becoming increasingly uncertain, Miller added.

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• © Alexey Maishev

Previously, the capacities of European UGSFs made it possible to fully cover the winter peaks in gas consumption, but only on the condition of stable supplies of pipeline raw materials from Russia.

However, now Russian fuel imports have fallen to their lowest levels, and purchases from alternative sellers are becoming more and more burdensome for the European budget, experts admit.

“The countries of Europe, namely its northern part, rely either on Norway, whose gas supply capacity is quite limited, or on liquefied natural gas (LNG) from other countries - Qatar, Nigeria, Algeria and the United States.

However, if earlier LNG was 15-20% more expensive than pipeline gas, now prices have become several times higher.

That is, gas has now become a very expensive pleasure for the EU countries,” Natalya Milchakova noted.

Industrial escape

Recall that earlier the pumping of Russian gas through the Yamal-Europe pipeline was completely stopped due to restrictions from Poland, and Ukraine halved the transit of raw materials from Russia to the EU through its territory.

Moreover, at the end of September, a series of explosions occurred on three lines of the Nord Stream system at once, and the transportation of fuel along these lines became impossible.

Thus, among the pipelines oriented to Europe, only Turkish Stream is operating at full capacity today.

At the same time, this trunk system allows pumping only about 16 billion cubic meters.

m per year, while, for example, through Nord Stream, a total of about 110 billion cubic meters could be transported.

m annually.

According to the Foreign Intelligence Service of the Russian Federation, indirect evidence indicates the involvement of the West in the sabotage at Nord Stream.

At the same time, Russia is not allowed to investigate the circumstances of the terrorist attack, but, according to Vladimir Putin, the main beneficiaries of the incident are already clear.

In particular, we can talk about the United States, which can now freely supply energy resources to the EU at high prices.

“As they say in decent companies, highley like, everything is clear, everything is clear who is behind this and who is the beneficiary.

It is now possible to really impose on European countries on a large scale natural liquefied gas from the United States, which is clearly inferior in terms of competitiveness to Russian pipeline gas.

After all, the prices for American LNG are much higher, this was well known to everyone before, ”Putin explained.

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It is curious that the American authorities themselves did not hide their optimism after what happened at Nord Stream.

For example, US Secretary of State Anthony Blinken called the incident an "incredible opportunity" for Europe to eliminate once and for all dependence on Russian energy resources.

“We have significantly increased our production ... Now we are the leading supplier of LNG to Europe, helping to compensate for any losses (of the region. -

) in oil and gas,” TASS quotes Blinken as saying.

At the same time, Washington's policy in the energy sector has already begun to raise questions from the European leadership.

In early October, German Vice-Chancellor, Minister for Economic Affairs and Climate Protection Robert Habek announced attempts by friendly countries to achieve "astronomical prices" for gas for the EU.

The German official did not directly blame the States, but called on Washington to help Europe overcome the energy crisis.

“The United States came to us when oil prices rose, and as a result, oil was released from national reserves in Europe.

I think it would be nice to show the same solidarity (on the issue. -

) of curbing gas prices, ”Khabek said.

Later, a similar position was voiced by the Minister of Economy, Finance, Industrial and Digital Sovereignty of France, Bruno Le Maire.

According to him, the US and the EU should reach balanced economic relations in the energy issue.

At the same time, the head of the French Ministry of Economy mentioned that today the United States sells its LNG to Europe four times more expensive than to its own industrialists.

“We must not allow the result of the Ukrainian conflict to be the economic dominance of the United States and the weakening of Europe ... the economic weakening of Europe is not in anyone's interests,” Le Maire stressed.

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• © Evgeny Haritonov

However, purchases of expensive LNG can fundamentally change the European economic model, Alexey Miller believes.

As the head of Gazprom recalled, for decades, the well-being of Europe and, in particular, its largest economy represented by Germany, rested precisely on the supply of relatively cheap raw materials from Russia, which the EU no longer has.

“This went on for more than 50 years ... Cheap energy resource - gas - in Germany gave more than a hundredfold leverage for the successful financing of German industry.

In fact, this (high gas price. -

) is a blow to the economic model that has existed until recently.

A very serious blow, ”Miller emphasized.

In his opinion, under the current conditions, deindustrialization awaits Europe.

At the same time, as Vladimir Putin noted, this process has already begun.

“Rising costs (for energy. -

) undermine local enterprises.

For some types of products, the rate of decline in output is measured in double digits.

Deprived of affordable energy resources from Russia, European businesses are forced to close or look for a better share in foreign jurisdictions, ”the president said.

"Ice Ceiling"

Against the backdrop of a noticeable rise in the cost of energy in the eurozone over the past 12 months, the growth rate of consumer prices for goods and services on average in the region reached 10% in annual terms - the highest level on record.

Moreover, in a number of European countries, annual inflation has already exceeded 11-12%, in the Netherlands it has reached 17.1%, and in the Baltic countries it has exceeded 22%.

This is evidenced by the materials of Eurostat.

Under the current conditions, European countries have already agreed on the introduction of a price ceiling for Russian oil from December and are now considering the possibility of applying a similar mechanism for gas.

However, according to Alexei Miller, such initiatives will lead to a complete cessation of the supply of Russian raw materials to the countries of the region.

“When you hear such sentences, the words of our well-known song “Ice Ceiling, Squeaky Door” come to mind… We play games according to the rules that we came up with.

And we don’t play games according to the rules that we didn’t come up with, ”Miller emphasized.

As Mark Goykhman, chief analyst at Teletrade, noted in an interview with RT, at the moment gas remains an extremely demanded product on the world market, so even if a price ceiling is introduced, many European countries are unlikely to comply with this restriction.

Meanwhile, if Russia completely cuts off the supply of its raw materials to the EU, the countries of the region may face an even greater rise in fuel prices, the specialist is sure.

“European states will have to buy even more LNG from alternative suppliers at higher prices.

This can further spur inflation, help slow down the economy, have an extremely negative impact on the population, and cause social tension,” the expert concluded.