Released January 24, 2022 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The head of the International Energy Agency (IEA) has accused Russia of withholding gas supplies to Europe to suit its own political and economic agendas.
"We believe there are strong elements of tightness in the European gas market due to Russia's behaviour," said Faith Birol, head of the IEA, at a conference in Paris. "I would note that today's low Russian gas flows to Europe coincide with heightened geopolitical tensions over Ukraine. Russia could increase deliveries to Europe by at least one-third--this is the key message."
This is the most damning accusation yet levelled at Russia by the international energy watchdog and follows on from similar accusations by a growing number of energy analysts and European Union (EU) ministers. The gas shortage in Europe over the winter months has seen prices continue to rise steeply. Throughout 2021, gas prices have skyrocketed from roughly US$18 per megawatt-hour (MWh) in January to more than US$165 per MWh towards the end of the year according to Dutch Title Transfer Facility, Europe's leading benchmark. Industrial Info has been tracking the negative impact that rising gas and power prices have been having on the steel and chemical sectors in the European Union (EU). For additional information, see January 5, 2022, article--Europe's Rocketing Energy Costs Force Smelter Shutdowns and September 23, 2021, article--Soaring Gas Prices Hit European Chemicals and Steel Sectors.
Birol said that the historic low gas storage levels across Europe were largely due to Russia's state-owned gas company, Gazprom (PINK:OGAZPY) (Moscow). It has supplied about 25% less gas than normal to Europe in recent months despite surging demand in the wake of 2020's economic slump. "The current storage deficit in the EU is largely due to Gazprom," Birol said, highlighting that gas storage levels in Europe stood at roughly 50% of capacity compared with 70% normally in January. "The low levels of storage in the company's EU-based facilities account for half of the EU deficit even though Gazprom storage only accounts for 10% of the EU's total storage capacity."
Russia has denied any wrongdoing over gas supplies. Dmitry Peskov, a Kremlin spokesperson, rejected the IEA's assertions to the Financial Times. "There's no trace of Ukraine in this. Russia is strictly fulfilling its obligations. Russia is ready to supply as much gas as people are willing to buy, but no more."
Russia's Prime Minister, Vladimir Putin, has been accused of using gas as a weapon to force the EU to stay out of its conflict with neighbouring Ukraine and as a way to get the final permits in Europe for the controversial Nord Stream 2 gas pipeline, which runs from Russia into Europe, terminating in Germany. It was developed by, and is 50% owned by, Russia's state-owned Gazprom and has been the source of conflict and economic sanctions between the U.S. and the EU in recent years. In recent weeks, there has been a build-up of Russian troops and military equipment on the border with Ukraine, a former Soviet state. Ukraine, which wishes to have closer ties to the EU, was the traditional transit route for Russia gas into Europe. The U.S. and Europe have threatened sanctions against Russia if it invades.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
"We believe there are strong elements of tightness in the European gas market due to Russia's behaviour," said Faith Birol, head of the IEA, at a conference in Paris. "I would note that today's low Russian gas flows to Europe coincide with heightened geopolitical tensions over Ukraine. Russia could increase deliveries to Europe by at least one-third--this is the key message."
This is the most damning accusation yet levelled at Russia by the international energy watchdog and follows on from similar accusations by a growing number of energy analysts and European Union (EU) ministers. The gas shortage in Europe over the winter months has seen prices continue to rise steeply. Throughout 2021, gas prices have skyrocketed from roughly US$18 per megawatt-hour (MWh) in January to more than US$165 per MWh towards the end of the year according to Dutch Title Transfer Facility, Europe's leading benchmark. Industrial Info has been tracking the negative impact that rising gas and power prices have been having on the steel and chemical sectors in the European Union (EU). For additional information, see January 5, 2022, article--Europe's Rocketing Energy Costs Force Smelter Shutdowns and September 23, 2021, article--Soaring Gas Prices Hit European Chemicals and Steel Sectors.
Birol said that the historic low gas storage levels across Europe were largely due to Russia's state-owned gas company, Gazprom (PINK:OGAZPY) (Moscow). It has supplied about 25% less gas than normal to Europe in recent months despite surging demand in the wake of 2020's economic slump. "The current storage deficit in the EU is largely due to Gazprom," Birol said, highlighting that gas storage levels in Europe stood at roughly 50% of capacity compared with 70% normally in January. "The low levels of storage in the company's EU-based facilities account for half of the EU deficit even though Gazprom storage only accounts for 10% of the EU's total storage capacity."
Russia has denied any wrongdoing over gas supplies. Dmitry Peskov, a Kremlin spokesperson, rejected the IEA's assertions to the Financial Times. "There's no trace of Ukraine in this. Russia is strictly fulfilling its obligations. Russia is ready to supply as much gas as people are willing to buy, but no more."
Russia's Prime Minister, Vladimir Putin, has been accused of using gas as a weapon to force the EU to stay out of its conflict with neighbouring Ukraine and as a way to get the final permits in Europe for the controversial Nord Stream 2 gas pipeline, which runs from Russia into Europe, terminating in Germany. It was developed by, and is 50% owned by, Russia's state-owned Gazprom and has been the source of conflict and economic sanctions between the U.S. and the EU in recent years. In recent weeks, there has been a build-up of Russian troops and military equipment on the border with Ukraine, a former Soviet state. Ukraine, which wishes to have closer ties to the EU, was the traditional transit route for Russia gas into Europe. The U.S. and Europe have threatened sanctions against Russia if it invades.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
