Page 8 - FSUOGM Week 03 2022

FSUOGM PERFORMANCE FSUOGM

Gas expert hits back at IEA

claims about Russia

RUSSIA A leading expert on the European gas market has But from the end of 2020 the situation
criticised the International Energy Agency (IEA) reversed, he explained, though Gazprom con-
Instead, Stern argues for blaming Russia for causing the continent’s tinued to offer European companies the option
that European policy energy crisis, instead attributing high energy to sign long-term contracts if they needed extra
has led to current high bills to the EU’s own policies. supply assurances.
prices. Jonathan Stern, a research fellow at the “Very few have done so, and national and
Oxford Institute for Energy Studies who served corporate greenhouse gas [GHG] reduction
as EU speaker for the EU-Russia Gas Advisory targets and policies will make any such future
Council between 2011 and 2015, noted that Rus- commitments increasingly untenable,” he
sia has long warned its European gas customers said. “Again, this is a European choice and not
against abandoning long-term contracts and one imposed or created by Russia. Complaints
shifting away from oil-indexed to gas market about Gazprom’s refusal to make additional
prices. supplies available, and maintain high levels of
While at the advisory council, his Russian gas in European storages, fail to recognise that
counterparts said that these were “extremely bad the current market model contains no obliga-
ideas.” tion to do so.”
“We disregarded these warnings and pressed This said, Stern said he was not ruling out
on with the creation of market hubs and moved “geopolitical motives related to Nord Stream 2
long-term contracts from oil-linked to spot and the general state of relations with Europe.”
prices,” he said in a letter published by the Finan- Gazprom has been accused of withholding some
cial Times. “For 10 years we were right, aside gas supplies to push European regulators to
from a very few months. Hub prices were sub- approve Nord Stream 2’s launch and drive other
stantially below those related to oil.” political concessions from the bloc.
Data published by the IEA supports this. The “The point is that for 10 years the gas market
Paris-based agency estimates that the EU saved model benefited European consumers,” Stern
some $70bn in gas import bills over the last dec- said. “For the past year the opposite has been the
ade by moving from oil indexation and towards case and Gazprom (and all other suppliers) has
hub pricing. But in October, the IEA reported reaped the benefits.”
that EU member states already stood to pay IEA head Fatih Birol claimed earlier this
$30bn more that year because of this market month that Gazprom could send as much as a
liberalisation. quarter more gas to Europe if it wanted to.
“As recently as May 2020, oil-linked prices “There are strong elements of tightness in
were nearly six times those at hubs which were the European gas market due to Russia’s behav-
at historical lows. The continent was awash with iour,” Birol said. “The current storage deficit in
gas,” Stern said. “Long-term contracts requiring the European Union is largely due to Gazprom.
gas to be taken or paid for were the last thing any- I would note that today’s low Russian gas flows
body wanted, and Gazprom was losing money to Europe coincide with heightened geopolitical
on exports.” tensions over Ukraine.” ™

P8 www. NEWSBASE .com Week 03 20•January•2022