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current Nord Stream flow) is 80% full by November 1: a necessary, though not sufficient, condition for Europe to survive the winter, Henderson says.
But if Russia decides to turn off the gas closer to winter, the storage facilities will not save: normally, in winter, gas from UGS facilities is only an addition to the ongoing flow of pipeline gas. “If one of its most important sources - imports from Russia - is reset to zero in winter, this will be a serious problem. If the pumping remains at the level of 20-40%, the situation will remain manageable, if the winter does not turn out to be too cold, ”says the expert. The weather is a critical factor: a cold winter could add 20 to 30 billion cubic meters to demand in six months, and if supplies from Russia stop, industrial production will begin to close in Europe, Henderson warns. The figure of 15% reduction in consumption, indicated in the recommendations of the European Commission, is not accidental - in annual terms, this is just about 60 billion cubic meters.
According to Marcel Salikhov, Director of Economics at the HSE Institute of Energy and Finance, the estimated deficit in the EU gas market in the event of a complete cessation of Russian gas supplies will amount to about 45–50 billion cubic meters in the period from the fourth quarter of 2022 to the first quarter of 2023 in the case of a “normal » winter and rise to 70–80 billion in the event of a cold winter. This means that theoretically, the continuation of Nord Stream pumping in a reduced mode, while maintaining the current pumping volumes on other routes, theoretically allows to ensure a market balance - but only in the case of a "normal" winter, says Salikhov.
Sergei Vakulenko believes that, given the current level of supplies from Russia both in autumn and winter, the gas accumulated in storage facilities will still not be enough to get through the winter while maintaining the usual levels of consumption. During particularly cold periods, there may be problems with the rate of rise of gas from storage facilities and the capacity of LNG terminals - these total capacities may not be enough to meet peak demand. “As a result, European governments will have to distribute gas administratively - refuse some enterprises, limit gas supplies to others, impose restrictions on household consumption. All these are unpopular and difficult measures for the economy. In such a scenario, Europe will not freeze, but will find itself in an economic crisis, or in an even deeper crisis than is now expected. The quality of life of ordinary people will also fall,” Vakulenko believes.
Both businesses and the population in Europe have yet to feel the rise in gas prices - the actual retail prices for both gas and electricity in a number of countries remain below the exchange prices, the analyst of the international company adds. In the second half of the year, the burden of increased prices will be gradually shifted to end consumers - and this will be the most severe price shock for both the population and businesses, he believes.
How does this threaten Gazprom?
Nothing. Here, all the analysts interviewed by The Bell agree - if Gazprom leaves gas sales to Europe at the current reduced level, then its revenue in 2022 will not only not fall, but will grow due to record price increases.
29 RUSSIA Country Report October 2020 www.intellinews.com