Russian gas supplies to the EU via the Yamal pipeline have virtually stopped today. According to the latest data from the Bloomberg terminal, at 13:00 our time, 8.8 gigawatt-hours a day corresponded. At the same time, Russia normally delivered over 850 gigawatt-hours a day in this way. Deliveries dropped dramatically yesterday, but today they have declined further despite short-term fluctuations.
They are thus the lowest since the first week of November. At that time, Russia had promised to supply more gas since November 8, which was due to the fact that it had previously filled its own tanks. The current drop in supply is therefore quite surprising, as the EU’s storage facilities are certainly not filled satisfactorily. On the contrary, they are the least fulfilled in the history of monitoring for this part of the year.
Can the US destroy Russia economically? Experts disagree
Tightening of economic sanctions and possible economic destruction of Russia should it attack Ukraine. The White House sends such threats to the Kremlin.
Reservation delay
Before the weekend, Russia’s gas monopoly Gazprom, which is largely controlled by the Kremlin, reserved supply capacity at the last minute at the German Mallnow junction, where the Jamal pipeline ends. The gas traders were startled that Gazprom had so much time with the reservation. In addition, the monopoly reserved slightly less capacity than was usual in the days before. The reservation corresponded to only 30 percent, instead of the usual 35 percent.
Therefore, on Thursday and Friday this week, the price of gas in the EU closed at the highest levels in history, in both cases exceeding EUR 135 per megawatt-hour. Prior to the pandemic, this price had been around 20 euros per megawatt-hour for many years.
Winter is coming
The whole tense situation is that the weather in Europe should be colder for the rest of December and also in the first two weeks of Januarythan is usual for that part of the year. This follows from a meteorological forecast from a specialized company Maxar Technologies. At the same time, electricity prices are already at record levels in both Germany and France, the EU’s two largest economies.
The price of electricity is rising as a substantial part of it is produced from gas in Europe. The key substitute for gas – coal – allows electricity to be produced cheaper up to a price of around 105 euros per emission allowance. The prices of allowances that are needed to produce electricity from coal in the EU are therefore also rising to record levels. In the first half of December, they cost over 90 euros for permission to emit a ton of carbon dioxide. Coal production from electricity is thus logically much more expensive.
Europe is threatened by a series of blackouts, warns expert
A series of blackouts threatens Europe in the winter, warns Jeremy Weir, head of Trafigura. It is one of the largest independent traders in raw materials in the world.
Rising inputs
The sharp rise in energy prices – especially gas, electricity and coal – is forcing some European industrial companies to reduce or stop production. For example, Nyrstar, the world’s leading zinc producer, will cease production in France in the first week of January. It is the French industrialists who are already complaining that rising energy prices are hampering their competitiveness.
In addition, about a third of France’s nuclear power generation capacity will be temporarily shut down in January. France, which usually exports peak electricity to neighboring countries, will now have to import it, which will contribute to further Europe-wide energy prices. In addition, Germany is permanently shutting down its three nuclear power plants by the end of this year.
Will Russia take advantage of that?
It cannot be ruled out that Russia will try to exploit the EU’s energy vulnerabilities. And quite possibly they are already doing so, which is why the aforementioned de facto cessation of gas supplies through the Jamal gas pipeline is taking place.
The Kremlin is concentrating its army on the border with Ukraine, which raises concerns in the European gas market about the escalation of the conflict between Russia and the West, which would further increase the price of gas in the EU. In addition, the Yamal pipeline, which handles about a fifth of Russia’s ground gas supplies to the EU, passes through Belarus. Minsk has repeatedly threatened in recent times that, in retaliation for additional sanctions, it could cut off gas supplies to the EU.
In the event of an invasion of Ukraine, Russia could further reduce or stop its supplies to the EU. In addition, the escalation of the conflict could delay the commissioning of the Nord Stream 2 pipeline. Delaying it would also put upward pressure on gas prices in the EU.
But even if Russia’s gas supplies to the EU remain at last week’s level, they will in the case of a normal winter, only 15% of the EU’s gas tanks are filled at the end of March, at least in the history of monitoring, as follows from the forecast of the consulting company Wood Mackenzie. This would mean that the tanks may not be replenished enough for next winter, so relatively high energy prices may be a reality in the EU for the next two years.
Lukáš Kovanda: The reduction in the price of petrol and diesel will stop by New Year’s Eve
Fuels continue to fall in price, but are stabilizing until New Year’s Eve. Yesterday, the US Federal Reserve convinced the markets that it would curb inflation without stifling economic growth and thus demand for oil.
– .
