As Prices Rise, Russia’s Gazprom Cuts Gas Supplies to EU by 70%

The Russian firm Gazprom, which is majority owned by the Russian state, is continuing to reduce gas supplies to Europe via Belarus, potentially aggravating tense market conditions. The price of gas has all but doubled in the last few weeks, frustrating Greek and EU consumers.

Exports to the EU via Belarus plummeted from 112 million cubic meters (mcm) on September 26 to just 30mcm on Sunday, October 3, according to Gazprom’s latest data. That amounts to a staggering 70% drop.

The new figures come after supplies via the Yamal pipeline, which runs from Russia via Belarus to Poland, fell by half last week. Analysts, such as US investment bank Goldman Sachs, have said the Yamal cuts could lead to higher gas prices this Winter.

There was already a global crunch in gas markets, which has seen wholesale prices at the Dutch TTF — the premier global hub for gas-futures trading — surge to €113 per megawatt-hour, a 100% price increase in less than a month.

Russian company Gazprom denies gas supplies cut

Gazprom executives, such as deputy head Vitaly Markelov and export director Sergey Komlev, have spoken out in reassuring terms regarding the precipitous drop in gas supply to Europe. Markelov said at the St. Petersburg International Gas Forum on Tuesday that gas exports by Gazprom to Europe in 2021 will “continue to remain high.”

“Accusations that Gazprom is not supplying gas to Europe are absurd,” Komlev earlier told the press. The Kremlin has said Gazprom was ready to pump more gas if needed. Russian diplomats insist that Gazprom is supplying EU customers in “good faith.”

At the same time, Russia is accused of tightening the screws in order to create political and market pressure. Russia says it could pump an additional 5.6 billion cubic meters (bcm) of gas to the EU this year via the Nord Stream 2 pipeline if it began immediately. But Russia wants to run the pipeline as its private monopoly.

The German regulator, the Bundesnetzagentur, said Tuesday Gazprom could be fined if it started pumping gas before becoming formally compliant with EU laws on “non-discriminatory network access” for competitors.

EU institutions react to Russia’s Gazprom policy

A group of 42 cross-party MEPs recently also complained that Gazprom was withholding gas. EU energy commissioner Kadri Simson said on Tuesday that the commission will be looking into this “very serious matter.”

Speaking on a trip to Estonia and Finland the same day, European Commission President Ursula von der Leyen also told journalists that low supplies from Russia were a key cause of high prices. “We are very grateful that Norway is stepping up its production, but this does not seem to be the case in Russia,” she said.

EU leaders are to discuss the option of setting up a strategic EU gas reserve against the background of high gas prices, Ursula von der Leyen said. There is currently no coordinated EU policy on strategic gas reserves, with each member state having its own mechanisms.

The Commission is to announce a new “toolbox” of recommendations on how to handle the gas-price spike next week. EU leaders will discuss the creation of the new “strategic gas reserve,” at a summit in Slovenia on Wednesday.

But in the long term, the EU should look to renewable energy-sources to cut dependence on volatile fossil-fuel suppliers, she stated. “Renewables are good. We will be independent,” von der Leyen said in Estonia.

According to Gas Infrastructure Europe, the EU’s gas storage sites are currently filled to just 75.7% of capacity, compared to 95.2% a year ago.