In the otherwise excellent piece “War leaves Gazprom grappling with collapse in sales to Europe” (Report, February 20) Anastasia Stognei appears to underplay Gazprom’s responsibility for the European energy crisis.
The explosions on the Nord Stream pipelines in late September 2022 did result in Gazprom losing its ability to deliver gas to Germany. However, the pipelines were already empty. From June 2022 Gazprom had found implausible excuse after excuse to cut the gas flow from those pipelines. Turbines for the Nord Stream pipelines were apparently out for repair in Canada, forcing cuts in gas supply. This was despite the fact that the pipelines were designed and provided with spare turbines to deal with the repair cycle.
Then there was the “planned maintenance” which twice during summer 2022 led to further cuts to gas supply.
Finally, in late August Gazprom reverted to its turbine excuse to entirely cut the flows in the Nord Stream 1 pipelines.
This was all part of a calculated and deliberate strategy to cut gas supplies to the EU which commenced in early 2021. Gazprom did not respond to (post-pandemic) economic growth that spring — as was its previous market practice — by increasing gas volumes on to the European spot market. As 2021 progressed it then did not provide natural gas for winter storage. In particular it left its own gas storage facilities located in the EU dangerously underfilled. And as the 2021/2022 winter heating season began to bite, Gazprom began to even cut supplies of gas contracted to its European customers with long-term supply contracts.
With these measures Gazprom pushed European gas prices ever higher, making more money from far less gas supply while causing tremendous harm to European consumers and industry.
After the second Russo-Ukrainian war got under way in February 2022 European gas supplies were squeezed even further. First by a presidential decree in April 2022. It sought, contrary to the provisions of its long-term supply contracts with its European customers, to enforce a controlled rouble payment system on those customers.
Under the controlled payment system, it was clear that the western counterparty could never be actually sure payment clearance had been achieved, even if it agreed to pay in roubles rather than as contracted in euros or dollars. The clear aim of this payment system was to find a means of cutting off more customers who did not want the acceptance of payment to be entirely at Moscow’s whim. Second, as described above, the fun and games with “failed” Nord Stream turbines and maintenance further reduced natural gas supplies to its European customers even before the explosions on those pipelines in late September 2022. This led to astronomical gas prices, reaching as high as €319 per megawatt-hour that August (the price range from 2009 to 2019 was €9 to €29 per MwH).
Ever since the first Russian gas arrived in western Europe in August 1968 Moscow touted Russian gas as reliable and secure.
From spring 2021 it proved anything other than that. It is not surprising most European energy businesses and regulators want no more to do with this company. And why other customers such as the Chinese are likely to think long and hard about taking any more Russian gas.
Alan Riley
Senior Fellow, Atlantic Council
Washington, DC, US
