Europe is facing gas shortages, but Russia has a crunch of its own. Gazprom has boosted production this year, but it’s directing the additional output to refill depleted storage sites at home. Russia has been producing close to its maximum capacity, but its domestic needs have curbed availability to Europe, according to the Oxford Institute for Energy Studies.
“Russia is not running out of gas and its prolific gas reserves allow Russia to meet much higher overall demand, but this requires time, money, and contractual assurances of offtake,” said OIES Senior Research Fellow Vitaly Yermakov.
Some analysts have argued that Russia has capped flows to Europe as a way to get its controversial Nord Stream 2 pipeline to Germany online. Flows through the link could improve supplies, but the start of commercial operations will depend on regulatory certification -- first in Germany, then at the European Commission. That could run well into next year. U.S. sanctions have also created challenges for the project.
The IEA stressed that it’s wrong to blame the shift away from fossil fuels for the surge in gas prices. The comments came a week after Frans Timmermans, the EU’s climate chief, warned that the record spike in energy prices must not undermine the European Union’s resolve to cut emissions.
Could Russia do more to ease the supply shortage of gas in Europe? Probably. Will it? That’s going to be a strategic decision and it will probably come with caveats. Natural gas is not oil. The network for mass transportation across oceans is still immature. Pipelines remain the preferred transportation network. Russia has a clear interest in opening its Nordstream 2 pipeline in a timely manner. That will need to be weighed against the need to bolster its reputation as a reliable supplier.Click HERE to subscribe to Fuller Treacy Money Back to top