"Systemic problem": why in the EU they started talking about the risk of a domino effect on the gas market of the union

Dutch climate and energy minister Rob Jetten warned the EU about the risk of a domino effect on the European gas market.

According to him, the difficult situation with gas in one EU country can spread to the entire continent.

“If individual EU members can fill their gas storages before November 1, that will be great, but if other countries in the bloc are unable to reach the 80% target - and especially large ones like Germany - then you should be aware that this will result in a domino effect. for the whole of Europe,” Jetten said in an interview with Politico on the sidelines of a meeting of the EU Council on Transport, Telecommunications and Energy, held in Luxembourg.

He added that in the event of a complete cessation of Russian gas supplies, the Netherlands would show "solidarity with neighboring countries."

According to the Dutch minister, The Hague is considering the possibility of increasing gas production at the largest Groningen field, but only as a last resort, since drilling operations have caused hundreds of devastating earthquakes in surrounding cities.

“The possibility of production (gas in Groningen.

) can only be considered in a situation where all countries of North-Western Europe reach the third phase (gas emergency plan.

) and take all other possible measures to prevent gas shortages, " Yetten said.

Earlier, Belgian Prime Minister Alexandre de Cros made a similar statement.

According to him, if problems arise in Germany due to a shortage of gas, a domino effect is inevitable for the entire European Union.

“If Germany has difficulties, it will have a huge impact on all the rest of Europe,” warned the politician, who was quoted by Western media.

As de Cros recalled, Germany has already acknowledged that due to problems with energy resources, it may have to reduce part of its economic activity.

Prior to this, the German Minister of Economics Robert Habek said in an interview with Der Spiegel that due to the lack of blue fuel in Germany, individual industries may close and all market processes may temporarily stop.

Last week, the second stage of the plan to deal with the emergency situation in the gas sector was activated in Germany, Habek said.

• German Economics Minister Robert Habeck

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• © Markus Schreiber

The second degree provides that the government has the right to recommend companies to save blue fuel.

According to the minister, this should make it possible to fill gas storage facilities by winter, despite the reduction in supplies from the Russian Federation.

gas issue

Recall that on June 14, Gazprom announced the limitation of gas supplies via Nord Stream due to the untimely return of “gas pumping units from repair” by the German company Siemens.

As explained in Siemens, the turbine cannot yet be returned to Germany from Montreal due to Canada's sanctions against Russia.

“Gas supplies to the Nord Stream gas pipeline can currently be provided in the amount of up to 100 million cubic meters.

m per day (with a planned volume of 167 million cubic meters per day),” Gazprom said in a message published on the Telegram channel.

It was noted that only three gas pumping units can be used at the Portovaya compressor station.

Later, on June 27, the European Council finally approved a resolution on ensuring the filling of gas storage facilities in the EU before the winter season and on the possibility of distributing blue fuel stocks among EU members "in the spirit of solidarity, despite supply interruptions."

“According to the decree, underground gas storage facilities in the EU countries must be filled with at least 80% of their capacity before the winter of 2022-2023 and up to 90% by the subsequent winter periods.

In general, in 2022 the EU will try to collectively fill its underground gas storage facilities to 85% of their total capacity.

As European Commissioner for Energy Kadri Simson later said during a press conference in Luxembourg, storage facilities in the European Union are currently filled with gas by more than 56%.

"Brussels can't handle it"

As Vyacheslav Kulagin, director of the Center for the Study of World Energy Markets at the Institute for Energy Research of the Russian Academy of Sciences, noted in a conversation with RT, the warnings of European officials about the domino effect on the EU gas market, which is in crisis, are quite justified.

“In recent years, the European Union has been working on creating a common energy space.

For example, European companies in one EU country can purchase part of the UGS reserves (underground gas storages.

) from another EU state that has managed to replenish its reserves.

Accordingly, a problem in one segment of the EU gas organism will affect the entire association.

So, if there is a clear shortage of gas somewhere, especially if it concerns a major player in the market, this will immediately affect all others and will be reflected not only in a sharp rise in prices, but also in the physical shortage of this resource, which will lead to all the ensuing consequences. problems,” the expert said.

As Kulagin explained, even if an EU country has the ability to fill its gas storage facilities and provide a reserve for the required period of time, “this does not mean at all that this state will not face problems due to its close relationship with other EU market participants.”

• EU flag

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• © Image Source

“Because, firstly, the volumes that such a country has can flow to other countries.

Secondly, gas storages are just an additional source of insurance that is needed to quickly respond to temperature changes.

States with filled UGS facilities will also have to buy blue fuel, and this may cause difficulties, since there will be a shortage on the market.

This is indeed a systemic problem of the EU, which Brussels will not be able to deal with in the near future,” the analyst noted.

Kulagin is sure that the requirements for filling UGS facilities by 80% in the face of a shortage of gas in Europe, the EU countries simply will not be able to fulfill.

“In addition, if it is directive to pump blue fuel there in such volumes, then someone has to pay for it.

Here the market scheme that was built in the EU and the political demands that Brussels is trying to impose on it collide.

This raises many questions about how all this will work.

Not to mention where to get gas to fill these storage facilities, ”the expert believes.

A similar position in an interview with RT was expressed by the deputy general director of the National Energy Institute Alexander Frolov.

He called the EU's innovations related to the rule of filling UGS facilities at least 80% "an indirect admission of helplessness" in the face of the current energy crisis.

“All these new rules are absolutely not adapted to the crisis situation, they will not save the EU countries.

The European Union was building an ultra-liberal system in which companies, following their own interests, make money by reselling gas and filling underground storage facilities in the summer in order to sell blue fuel in the winter.

But it turned out that this system does not work.

At the first push, she began to crumble.

Therefore, the EU was forced to directively determine how much gas should be in UGS,” Frolov is sure.

Kulagin, for his part, commented on the words of Khabek, who allowed the closure of a number of industrial sectors due to a shortage of gas in Germany.

“When an industrial enterprise does not have enough gas and it is forced to buy it at a fairly high price, the cost of manufactured products also rises, which makes the organization uncompetitive in the world market.

That is why even now part of the industry in Germany is stopped simply because even if there is an energy resource, it is not possible to use it in such a way as to ensure profitability.

This is a really big problem,” the analyst said.

At the same time, the energy crisis, both in Germany and in Europe as a whole, is significantly aggravated not by Russia's actions, but by the sanctions of the West itself, which caused the suspension of part of gas supplies to the EU, experts say.

“We are talking about the story around the German company Siemens, due to the actions of which, under the pressure of Canadian sanctions, only three gas compressor units can be used by Gazprom at the Portovaya compressor station.

It turns out that in this case, the sanctions were imposed not against Russia, but against Germany, since, as a result, gas supplies to Germany were stopped.

So, Canadian restrictions worked rather strangely.

This is not a rare case when the West imposes sanctions that hit mainly not the Russian Federation, but the Western countries themselves, ”concluded Frolov.