After Russia proposed to increase gas supplies to the European region, experts warn that the old continent is now heavily dependent on Russian energy sources, as the US has warned before.
The price of natural gas contracts in Europe hit new highs this week, and year-to-date, benchmark gas prices in the region are up nearly 500%. Currently, Europe is in a dilemma when demand jumps but supply is tight as winter approaches.
Gas prices in Europe saw some volatility during the October 6 trading session. Not long after hitting new highs, gas prices cooled somewhat when Russian President Vladimir Putin intervened and offered to increase gas supplies to the old continent.
According to CNBC, market analysts say that the Kremlin’s new move shows that Europe is increasingly dependent on Russian gas. Currently, Russia is waiting for Germany to approve the Nord Stream 2 gas pipeline.
The above $ 11 billion pipeline has been completed, despite the unpleasant attitude and objections of the US government. For years, Washington has warned that Nord Stream 2 would harm Europe’s energy security, and Russia may seek to use gas supplies as leverage in its dispute with Europe.
“Energy Blackmail”
“Europe has made itself a hostage to Russia for energy supplies,” said Timothy Ash, senior strategist at Bluebay Asset Management. Mr Ash described the situation as “unbelievable”.
“It’s clear that Russia knows Europe is having a hard time with energy, but Europe is too weak to say it outright,” Ash said, calling it a form of “energy blackmail.”
“Europe is cowering because of the fear that when it comes to winter, Russia will squeeze gas supplies and only open the faucet until the Nord Stream 2 pipeline is approved,” the expert said.
A gas pipeline in Europe. (Photo: Bloomberg).
On October 6, Putin used a televised government meeting to propose additional energy supplies to Europe. The Russian president also criticized the old continent for canceling many long-term “gas” contracts in exchange for spot contracts, but said the Kremlin was ready to renegotiate new long-term contracts.
Sharing with CNBC, many other experts also believe that Russia intentionally withholds gas supplies to Europe to force Germany to speed up Nord Stream 2 certification. However, Russia has denied this allegation when speaking. Dmitry Peskov denied that Moscow played any role in Europe’s energy crisis.
However, on the same day, Russian Deputy Prime Minister Alexander Novak noted that Germany’s quick approval of Nord Stream 2 could help cool gas prices.
Strategist Ash believes that urging Europe to certify the controversial gas pipeline has been “on Moscow’s agenda for a long time” and the market is “really naive to think that Moscow will do anything to appease it.” Europe’s crisis before Nord Stream 2 is opened”.
Mike Fulwood, senior fellow at the Oxford Institute for Energy Studies, agrees that any decision by Russia to supply more gas to Europe is politically motivated and tied to the Nord Stream endorsement. 2.
Similarly, Mr. Bilal Hafeez, CEO of consulting firm Macro Hive, also agreed that Russia is taking advantage of Europe’s gas crisis to its own benefit, specifically pushing Germany to nod in agreement. for Nord Stream 2.
EU beware
The skyrocketing gas prices have put the issue of energy supply at the top of the agenda of the European Union (EU). Leaders have called for the common economic bloc to be more energy independent, given that nearly 90% of EU supplies are imported and Russia is one of the main partners, alongside Norway, according to the European Commission. Europe (EC).
The Nord Stream 2 pipeline has already faced a lot of criticism in Europe, in which Ukraine is hurt and angry because of the agreement between the EU and Russia.
If the EU chooses Nord Stream 2, Ukraine’s gas pipeline will be bypassed and therefore they will lose a sizable gas transportation fee. Poland is also in a similar situation, the government of this country thinks that the Nord Stream 2 pipeline is just a tool to strengthen Russia.
In July, the two countries issued a joint statement, asserting that “the decision to build Nord Stream 2 was made in 2015, just a few months after Russia illegally annexed Ukrainian territory, thereby creating a security, prestige and political crisis in Europe”.
Europe’s gas supply has long been a hot topic, causing relations between the US and the EU to deteriorate. Experts call the war to supply gas to Europe as a confrontation between the US and Russia, when both sides want to gain market share with the supply of natural gas (Russia) and liquefied gas (USA). .
Experts agree that Europe needs to diversify its energy sources, avoiding total dependence on Russia. “The more diversified Europe is in supply, the less risk there is,” said Fulwood of the Oxford Institute for Energy Studies.
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