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DECEMBER 2021

Gazprom Avoids Booking Additional Capacities Through Ukraine And Poland For 2022

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Gazprom Avoids Booking Additional Capacities Through Ukraine And Poland For 2022

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Russia’s gas giant, Gazprom reportedly declined to reserve additional capacities for the transit of Russian gas through Ukraine and Poland to Europe for the first, second and third quarters of 2022.

This move would reportedly help ease prices in the currently volatile market.

The Kremlin said Russia remained committed to start pumping additional gas to Europe once domestic storage tanks were replenished, in line with an order given to Gazprom last week by President Vladimir Putin.

Moscow has said it is meeting its contractual obligations in full though the International Energy Agency and some European politicians have suggested Moscow can do more.

The operator of the Polish Gas System System offered at auction 89 million cubic meters per day through the Kondratka entry point on the border of Belarus and Poland. Gazprom’s long-term contract for gas transit through Poland ended last year, after which the Russian company booked capacity for the gas year through October 2021. The company still has the possibility of monthly booking in 2022.

The rejected reservation on November 3rd was not the only opportunity to reserve the capacities put up for auction. There will be future chances to book capacities on other terms.

Gazprom booked only a third of the total additional capacity offered by Poland for November.

“If NS2 isn’t soon approved for launch, however, Gazprom may be forced to request additional, more traditional transit capacity on Yamal-Europe,” he said.

Gazprom, presumably, preferred to refrain in order to get more certainty by the end of the year on the level of gas demand in Europe, as well as the timing of the launch of Nord Stream-2.

It’s likely that in the next two years, global demand for LNG will grow faster than its supply. Therefore,  most of its additional supply volumes will go to the Asia-Pacific region, which means that Gazprom should not wait for increased competition in the European market.

This is very similar that Russian leadership realized that there was a big stock exchange game around the emerging gas market. Moscow was forced to realize it and went bull the market.

In the context of the expansion of spot trading and LNG supplies, pipeline supplies play the role of a stabilizer of the market. The lack of guarantees of Gazprom’s supplies to the European market may dramatically increase risks and gas prices.

However, some market experts express doubts that Gazprom itself determines its market strategy today. Until recently, the top management of the Russian gas monopolist demonstrated absolute dependence.

Still, the crisis hasn’t subsided and it could potentially deepen in the coming weeks and months.

Benchmark natural gas prices in Europe have surged some 250% this year, and at one point in early October spiked eightfold as demand shot higher in economies rebounding strongly from last year’s pandemic-induced recessions.

Strong demand in Asia and lower-than-expected renewable energy production have also put a squeeze on the market, but traders have said Gazprom’s decision not to book more capacity on gas transit pipelines to Europe has made the situation worse.

Russia’s Yamal-Europe pipeline, meanwhile, which normally sends gas westwards through Poland to Germany, was working in reverse mode for a fourth straight day on November 2nd and was expected to stay that way until at least November 3rd, according to data from German pipeline operator Gascade.

The reversal, which neither Gazprom, Poland nor Germany have explained, has added to market nerves.

A spokesperson for German utility RWE, one of Gazprom’s big customers, said: “Our existing supply agreements with Gazprom Export are being adhered to; we are not cut (off).”

In response to accusations, Moscow denies it is withholding supplies to exert pressure on German regulators to approve gas shipments through the new Nord Stream 2 pipeline across the Baltic Sea to Germany.

Putin has said gas could start flowing through the new pipeline from Russia within a day of approval being granted.

The German regulator has until early January to certify the pipeline but may make its decision earlier. Once it has made its recommendation, it goes to the European Commission, which has another two months to respond.

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Lone Ranger

The U.S. and EU are set up for destruction in my opinion.
Its already decided so they dont need the gas.
Thats why Yamal was in reverse, Russia took back their reserves because they will need it.
Im probably a bit pessimistic but thats how it looks like.
Everybody moving away from the U.S. and EU in favor of Asia, South America.
Hope Im wrong.

Peter Jennings

When winter starts biting, Nord Stream-2 will get it certification, for whatever that is worth.

anders dumbocracy

we make wind and pay more for electricity than all EU nations in dinkmark

Jon

“Who runs bartertown?”

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