Page 5 - FSU OGM Week 26 2021

FSUOGM COMMENTARY FSUOGM

may also jeopardise energy security during the recently, however. The US Biden administra-
next winter. tion in May waived additional sanctions against
Gas prices are typically higher in winter and the pipeline, a move widely perceived as a tacit
lower in summer, giving companies an incentive admission that the US can do little to thwart the
to store more volumes during the hotter months project. Germany, an ardent supporter of Nord
of the year. But this year is anything but typical, Stream 2, is set to approve its launch later this
owing to the continuing impact of the coronavi- year. It is expected that Biden will at some point
rus. With companies having no reason to with- ease the existing sanctions against Nord Stream
hold gas from the market and place it in storage, 2, possibly after trilateral talks with Moscow and
European storage utilisation is at an unusually Berlin.
low level. High gas prices and low storage levels
Worst still, prices could climb further in the strengthen the case for EU authorities to per-
coming months as Gazprom closes some of its mit the project. However, if the pipeline really
export pipelines for scheduled maintenance in is the motive for Gazprom withholding supply,
June and July. TurkStream is already offline for the company risks convincing the EU that the
repairs, and will not return to operation until threat that Russia poses to energy security is far
June 29. Meanwhile, Nord Stream 1 is due to halt too great, giving the bloc a rational to restrict the
shipments between July 13 and 25. pipeline.

Enter Nord Stream 2 Explanation in Ukraine
Other industry players suggested that Gazprom Still, not all experts are convinced that the
might be inflating gas prices to put pressure on blame for the price spike lies with Russia. Lau-
EU governments to give its controversial Nord rent Ruseckas, energy analyst at IHS Markit,
Stream 2 pipeline the greenlight. The embattled argues instead that Ukraine has been limiting
project is nearing its finish, with Russian Presi- how much transit capacity it makes available to
dent Vladimir Putin recently having hailed the Gazprom.
completion of pipelaying at the first of its two "Because this is Gazprom, everyone tends to
strings. read sinister or at least hardball tactical motives
“Gazprom is effectively saying to the EU: ‘give into this," Ruseckas said in a thread on Twitter.
us the green light for Nord Stream 2 and we will "But I think on big piece of the picture is being
send you all the gas you need’,” Tom Marzec- ignored – the terms on which Ukraine is offering
Manser, lead European gas analyst at ICIS, told additional capacity to Gazprom."
the FT. “‘Don’t, and we won’t. We’re not going to Under its current transit contract with
send the extra gas via Ukraine and you’ve seen Ukraine, Gazprom is paying to send 110mn
what that means for wholesale prices in a tight cubic metres per day of gas via the country this
global [LNG] market.’” year, although the Ukrainian gas system could
Nord Stream 2 has been beset by financial handle almost three times this amount. Ukrain-
and legal problems since its conception six years ian gas grid operator GTSOU offered 41.6 mcm
ago. It was originally due to start pumping gas at per day of additional firm transit capacity in
the end of 2019, but permitting delays in Den- January, but in February it offered only 15 mcm
mark and US sanctions have held the project up. per day. Yet Ruseckas noted that there were no
Nord Stream 2’s prospects have brightened indictions that GTSOU had reduced the physical

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