A year ago, the Russian power apparatus shocked buyers in the EU with a gas supply freeze. First, Moscow cited a missing gas turbine after maintenance work in Canada as the reason for cutting back supplies through the Nord Stream 1 pipeline. Then gas supplies stopped altogether for maintenance work and were not resumed because of an alleged oil leak at the Portovaya compressor station. On August 31, 2022, natural gas flowed through the Baltic Sea pipeline for the last time, albeit in a quantity that was hardly worth mentioning: 235,000 kilowatt hours, the annual consumption of a good 21 households in Germany.
At the time, the EU accused Gazprom of shutting down the pipeline laid from Russia to Germany under false pretenses. Russia prefers to burn gas rather than fulfill contracts. This is further evidence of his unreliability as a supplier.
With the delivery stop, Russia wanted to increase the pressure on Germany and the EU to relax the sanctions imposed by the West in the wake of the Russian war against Ukraine. As early as May 2022, Russia had completely stopped transport through the Yamal-Europe pipeline. Moscow’s calculus was to further drive up the price due to the lack of gas volumes. It had already skyrocketed since autumn 2021 due to the global economy picking up again and later due to the war. The Kremlin wanted to ensure that the finished Nord Stream 2 Baltic Sea pipeline was put into operation after all. Kremlin boss Vladimir Putin advertised that this would solve many problems at once – and above all that prices for European consumers would fall.
But Germany made it clear that it would not allow itself to be blackmailed. Even before the Baltic Sea pipelines could have been put into operation (again) under any pressure from the Europeans, saboteurs blew up both lines of Nord Stream 1 and one of Nord Stream 2 near the Baltic Sea island of Bornholm at the end of September. Investigations into the perpetrators run. “Der Spiegel” and ZDF recently reported after extensive research that the tracks led to Ukraine. The country has always been against the pipelines. However, President Volodymyr Zelenskyy denied Kiev’s involvement in the attack.
The damage to the Russian gas monopoly Gazprom is immense. China is buying significantly more gas than ever before – but at comparatively low prices. So far, Russia has not been able to find a substitute for the EU market, although it can continue to sell liquefied natural gas (LNG) to the EU. According to Russian analysts, Gazprom could lose 65 to 75 percent of its traditional market in the EU forever.
Even before the turbine dispute, decisions by Kremlin chief Vladimir Putin had led to a systematic reduction in delivery volumes. A usual delivery quantity of 1755 gigawatt hours per day, for example, was last registered on June 1st. After that, the numbers decreased. Many European buyers canceled their contracts with Gazprom after Putin ordered bills to be paid in rubles instead of euros or dollars.
According to Gazprom, under the pressure of this step and as a result of the sanctions, exports fell by almost half (45.5 percent) to 100.9 billion cubic meters last year. According to energy experts, exports could fall by another 50 percent this year. Analysts expect average monthly export revenues of just $1.4 billion – a 60 percent drop from the annual average. In the past year, the monthly income for Russia was at times around eight billion US dollars due to high prices. Now prices are back to pre-war levels.
A year later, the natural gas supply situation in Germany has eased. “The gas flows to Germany are stable and balanced,” states the Federal Network Agency. Gas mainly flows to Germany through pipelines from Norway, Belgium and the Netherlands. In addition, there are smaller quantities via three new LNG terminals in the North and Baltic Seas. More are to follow. The liquefied natural gas comes from the USA, for example.
In the meantime, wholesale prices have fallen significantly, and as a result many utilities are also passing on the lower purchase prices to end customers. The storage tanks in Germany are already 94 percent full several weeks before the start of the heating period, and the trend is rising. However, experts do not want to give the all-clear: A hard winter could quickly empty the stores. “That’s why economical gas consumption remains important,” says the Federal Network Agency.
