Page 6 - FSUOGM Week 38 2021

FSUOGM COMMENTARY FSUOGM

EU lawmakers accuse Gazprom

of price manipulation

Gazprom is in many European politicians' crosshairs at the moment

EUROPE A group of EU lawmakers mainly hailing from gas sales to countries beyond the former Soviet
Poland and the Baltic States have asked the Euro- Union surged to 138.6bn cubic metres in the
WHAT: pean Commission to investigate Gazprom for first eight and a half months of the year. This was
EU lawmakers accuse alleged manipulation of gas prices. close to the historic level of 141.3 bcm supplied
Gazprom of price Some 40 of the European Parliament’s more in the corresponding period of 2018, although
manipulation. than 700 members signed a letter to the Com- that volume includes sales to China that began
mission asking for a probe into the extent that at the end of 2019. Otherwise, sales would have
WHY: Gazprom is responsible for current record high amounted to only 132 bcm.
European gas prices are prices in Europe. The MEPs cited recent press On the transit issue, some analysts have
at record heights. reports as evidence. pointed to Ukraine and Poland offering inade-
Gazprom has been avoiding booking addi- quate terms for additional capacity. But it is true
WHAT NEXT: tional transit capacity via Ukraine and Poland that Gazprom is not selling as many spot cargoes
Analysts doubt that the beyond contractual requirements, the lawmak- on its electronic sales platform.
accusations have any ers said. It has also closed down fields in Western Gazprom has dismissed the criticism, with
substance. Siberia, partly in response to a serious fire that CEO Alexei Miller saying on September 17 that
broke out at the Urengoy condensate treatment the company was a reliable supplier to Europe
plant in late August, leaving some of its capac- “no matter how cold the winter and no matter
ity still offline. But MEPs said: “it is not clear how harsh the conditions.”
whether all the shut-ins were justified by that “We always fulfil our contractual obligations
accident, and whether deliberate market manip- in full,” he said.
ulation was involved.” Kremlin spokesman Dmitry Peskov mean-
What is more, the Russian supplier has not while said that the timely launch of Nord Stream
responded to requests from its European cus- 2 would provide some relief to the European
tomers to guarantee extra volumes in recent market.
months, in order to boost levels of gas in storage. “Undoubtedly, the early commissioning of
But the available data shows that the company Nord Stream 2 will significantly balance price
had enough production capacity to meet this for natural gas in Europe, including on the spot
increase in demand. market,”
“All these factors allow [one] to suspect that Some analysts have also weighed in on Gaz-
the record natural gas price surge in Europe prom’s side. BCS Global Markets (BCS GM) ana-
in the recent weeks may [be] a direct result of lyst Ronald Smith told NewsBase he believed the
Gazprom’s deliberate market manipulation and European gas crisis was in large part caused by
actions aimed at intentional[ly] withholding EU energy policy. In particular, he pointed to
available gas production capacities from the Brussels’ desire to have more spot-based, gas-to-
market in order to push gas prices up,” the MEPs gas pricing in contracts at the expense of oil-in-
said. dexed contracts, which provide greater stability
The lawmakers went on to accuse Gazprom and currently have prices three times lower than
of using this tactic to compel the EU to permit spot rates.
Nord Stream 2’s launch. Though complete, Nord “There are many and complex drivers of high
Stream 2 will need technical certification to start energy prices in Europe,” Laurent Ruseckas, a
commercial flow, and its operating company gas expert at IHS Markit, added on social media.
will need certification as an independent trans- “That said, it is definitely easier to focus on a sin-
mission operator for the pipeline to run at full gle cause and a traditional villain.”
capacity. “If having some spare productive capacity is
“We call on the European Commission to a violation of competition rules, then Gazprom
urgently open an investigation into possible has been breaking these rules for at least 10 years,
deliberate market manipulation by Gazprom without comment or complaint,” he continued.
and potential violation of EU competition rules, “Had Gazprom been producing [from] all its
which had resulted in sufficiently higher energy fields flat out at all times, it would have a vastly
bills for the European consumers,” the MEPs higher share of the European gas market, likely
said. prompting a different letter or warning from
Despite these allegations, Gazprom’s pipeline MEPs.” ™

P6 www. NEWSBASE .com Week 38 22•September•2021