On Wednesday, Fatih Birol, the executive director of International Energy Agency (IEA), called out Russian oil and gas giant Gazprom for worsening Europe’s natural gas crisis by lowering supplies.
While talking to reporters, Birol said that Europe’s record-high energy prices and low storage can be attributed to Russian state-owned Gazprom’s behaviour. According to Birol, despite an increase in demand since 2020, Gazprom has sent less gas to Europe this winter jeopardising large parts of European economy. “Contrary to other pipeline supporters such as Norway, Algeria and Azerbaijan, which increase their supplies to Europe, Gazprom reduced its exports to Europe by 25%,” Birol said, adding, “In terms of European gas... we believe there are strong elements of the tightness in European gas markets due to Russia’s behaviour.”
Gas prices in Europe are currently at a historic high with underground gas storage levels at only 50% of capacity as compared to historical average of 70%.“Uncertainty over price and supply remains high with most of the heating season still to come,” Birol said.
Last December, Gazprom reduced daily shipments through its Yamal pipeline, which runs across Belarus and Poland to Germany, from 27 million cubic meters (mcm) to 4.7 mcm in a matter of days. The pipeline was operating at a record low of 4% of its total capacity. The Yamal and first Nord Stream are Russia’s two major gas sources to Europe. Moreover, Gazprom booked minimal supply bookings since then to make prices skyrocket past $1,700 per thousand cubic meters - 70% higher compared to September prices. Subsequently, many have accused the Russian company of leveraging its position as Europe’s primary gas supplier to squeeze more money. However, Gazprom then refuted these claims saying it was “in line with the requests from consumers and in full compliance with the current contractual obligations.”
“I would note that today’s low Russian gas flows to Europe coincide with heightened geopolitical tensions over Ukraine,” Birol said, adding, “We believe there are strong elements of tightness in the European gas market due to Russia’s behaviour.” According to ABC, Birol resisted pressure from reporters over claims that Russia is using gas as a political weapon.
Currently, Russia is holding bilateral and multilateral meetings with the United States (US) and other major European alliances such as North Atlantic Treaty Organisation (NATO) and Organization for Security and Co-operation in Europe (OSCE) over military tensions with Ukraine. Amid these discussions, the fate of Russia’s flagship pipeline Nord Stream 2 also hangs by a thread as its certification was recently suspended by German courts over non-compliance. The US and Germany have also threatened to shut down Nord Stream 2 if Russia invades Ukraine.