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Russia sends alarm bells ringing over Europe’s winter gas supplies: ‘Our product, our rules

Russia sends alarm bells ringing over Europe’s winter gas supplies: ‘Our product, our rules’

An ominous warning from Russia’s state-backed energy giant Gazprom has stoked fears of another stormy winter for European gas supplies.

As a pre-summer heatwave hits western Europe this week, policymakers in the region are scrambling to fill underground storage with natural gas supplies to provide households with enough fuel to keep the lights on and homes warm before the cold returns.

Fears of a severe winter gas shortage are driven by the risk of a total supply disruption to the EU — which receives roughly 40% of its gas via Russian pipelines.

The bloc is trying to rapidly reduce its reliance on Russian hydrocarbons in response to the Kremlin’s nearly four-month-long onslaught in Ukraine.

The worry for many is just how dependable Russian gas flows are to Europe as the conflict continues and as economic sanctions bite.

Indeed, Moscow has already cut gas supplies to Finland, Poland, Bulgaria, Denmark’s Orsted, Dutch firm Gasterra and energy giant Shell for its German contracts, all over a gas-for-rubles payment dispute.

More recently, Russia’s Gazprom opted to further limit supplies via the Nord Stream 1 pipeline from Russia to Germany under the Baltic Sea and reduced flows to Italy.

An ominous warning from Russia’s state-backed energy giant Gazprom has stoked fears of another stormy winter for European gas supplies.

Russia sends alarm bells ringing over Europe’s winter gas supplies: ‘Our product, our rules

Gazprom on Wednesday cited a technical problem for the supply cut, saying the problem stemmed from the delayed return of equipment serviced by Germany’s Siemens Energy in Canada.

Austria and Slovakia have also reported supply reductions from Russia.

In fiery comments likely to have sent alarm bells throughout the bloc, Gazprom CEO Alexei Miller said Thursday that Russia would play by its own rules after the firm halved supplies to Germany.

“Our product, our rules. According to The Moscow Times, we don’t play by rules we didn’t create,” Miller said during a panel session at the St. Petersburg International Economic Forum.

Miller reportedly said the return of equipment at the Portovaya compressor station — part of the Nord Stream 1 pipeline that carries Russian gas to Germany — had been hampered by an unprecedented barrage of economic sanctions.

He added that he saw no solution to the problem.

German Economy Minister Robert Habeck has rejected the claim that Western sanctions were to blame and slammed Russia’s supply curbs as a “political decision” designed to unsettle the region and ramp up gas prices.

Wholesale Dutch gas prices, a European benchmark for natural gas trading, jumped by 9% during Friday morning deals before paring gains.

Energy rationing warning

The latest dispute appears to reaffirm the risk for European countries highly dependent on Russian gas, especially amid growing fears that Moscow could implement a broader supply squeeze in the coming months.

Underlining the seriousness of these concerns, IEA chief executive Faith Birol warned last week that EU countries might be at risk of winter energy rationing if member states do not take more steps to improve energy efficiency.

The European Commission, the executive arm of the EU, said on Friday that it was aware of Gazprom’s announcements that it would reduce flows via Nord Stream 1 and deliveries to several companies across the EU.

A spokesperson for the bloc described the move as “yet another example of Gazprom and Russia’s use of its energy supplies as an instrument of blackmail.”

“Based on our exchange with the national authorities yesterday via the Gas Coordination Group, there is no indication of an immediate security of supply risk, but we will keep monitoring the situation very closely and remain in contact with the national authorities of the affected countries,” they added.

It is unknown when or if Nord Stream 1 gas flows will return to normal levels.


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