popular articles

Europe faced with Gazprom’s gas monopoly

Tensions between Russia and Europe are reaching a climax this week, with a drastic drop in gas supplies. Struggle between Gazprom and Naftogaz.
Poutine Zelensky

Please share:

Tensions between Russia and Europe reached a new climax this week. This is due to gas exports at their lowest level and growing tensions with Ukraine.

Europe faced with falling Russian gas exports

Since Monday December 20, 2021, Russian gas exports through the Yamal pipeline have been at their lowest level ever. Volumes to Europe, usually around 10 million kWh/h, fell to just 370,000 on December 20, 2021.

On Wednesday December 22, measurements ranged from 900,000 to 1.6 million kWh/h, depending on the point of passage. As a result, gas prices in the Netherlands rose by a further 16% to €171.40/MWh per month on Tuesday December 21. An umpteenth record broken in a very tense energy context for Europe.

Russian gas

The worst is yet to come

But the worst is yet to come. According to Ukrainian gas company Naftogaz, Gazprom has stopped communicating its purchase offers. What’s more, the company is said to have planned only 8.3 million kWh/h of capacity to Europe from Yamal in January 2022.

Gazprom denied any manipulation, arguing that priority was given to the Russian market during periods of extreme cold. According to Gazprom, the company is complying with the legal provisions agreed with Ukraine and Europe.

Ukraine calls on Europe to end Gazprom monopoly

Against this particularly tense backdrop, Naftogaz has submitted a request to the European Commission. The company is calling on Europe to take action against Gazprom’s monopoly, which, in its words, is negative.

“Gazprom’s actions are anti-competitive and have a fundamentally negative impact on all European consumers,” says Yuriy Vitrenko, Director of Naftogaz.

Dependence on Gazprom

Gazprom has a monopoly on Russian gas pipelines under a 2006 law. This gives the company total control over all transits to Europe via Russia. As a result, exports from Central Asia and private companies are also dependent on Gazprom, which is over 50% owned by the Russian state.

An untenable situation for the Ukraine, which in fact depends on Russia for its energy supplies. The same goes for Europe, where a third of gas consumption is chartered from the Russian giant.

Russia the big winner in the crisis?

Naturally, this situation benefits Gazprom, which reaps the rewards of soaring gas prices. For 2021, the company should exceed €30 billion in profits, following record revenues between July and September 2021. Similarly, 2022 is set to see further price inflation and record profits.

However, this supremacy may not last. In Europe, this stranglehold on energy security is less and less tolerated. The Nord Stream 2 legal battle is a good illustration of this growing awareness.

In fact, the pipeline has been at a standstill since its construction, due to non-compliance with European competition rules. In addition, the new German government may reconsider its start-up despite the promised doubling of exports.

Alexei Miller

Breaking the monopoly in favor of Rosneft, also a state-owned company

On the Russian side, the government could also agree to relax Gazprom’s monopoly in favor of the oil company Rosneft. Officially, the parties involved say they want to comply with European competition rules. However, this liberalization needs to be measured.

Rosneft is state-controlled, headed by Igor Setchine, Deputy Prime Minister of the Russian Federation. In this way, two state-controlled companies would retain control over exports.

What can Europe do in the short term?

The European Commission has formally taken note of Naftogaz’s request, but has not yet given its opinion. And for good reason: in the short term, Europe is not in a strong position to engage in head-on combat.

Gas stocks remain abnormally low for the season, and energy prices are raising fears of an economic crisis. In addition, tensions on energy markets offer few alternatives.

What to make of the Russian-Ukrainian armed conflict?

The conflict in Ukraine is also at the heart of the Gazprom issue. While Russia denies any political manipulation, the synchronicity with the situation in the Donbass is striking. In the past, Moscow has not hesitated to use gas to influence negotiations.

And for many of Europe’s chancelleries, the correlation is unmistakable. Thus, a gas war would not be conducive to resolving the conflict, which also has a significant impact on prices.

Multiplying new energy projects

Nevertheless, in the medium term, Europe is not outdone in ensuring its autonomy. Hydrogen projects are multiplying, France wants to renew its nuclear fleet, and the European Union has increased its commitment to low-carbon energies.

For many experts, the excitement surrounding gas is just one stage in the transition to renewable energies. If Russia and Gazprom benefit from this monopoly, European energy diversification could turn against Russia.

Register free of charge for uninterrupted access.

Publicite

Recently published in

The Algerian energy group Sonelgaz is offering its technical expertise to Burkina Faso to strengthen its electrical infrastructure, illustrating Algeria's strategic intention to consolidate its presence in sub-Saharan Africa’s energy markets.
Washington again delays the enforcement of sanctions against NIS, the Serbian energy company controlled by Gazprom, extending the status quo until the end of April according to Serbian President Aleksandar Vucic.
Washington again delays the enforcement of sanctions against NIS, the Serbian energy company controlled by Gazprom, extending the status quo until the end of April according to Serbian President Aleksandar Vucic.
The United States has strengthened its support for Guyana amid Venezuela’s claims over the Essequibo, warning Caracas of a military response in case of aggression targeting the territory or American oil interests.
The United States has strengthened its support for Guyana amid Venezuela’s claims over the Essequibo, warning Caracas of a military response in case of aggression targeting the territory or American oil interests.
No attacks on energy installations have been reported since a partial agreement announced by the United States, marking a pause in hostilities targeting critical infrastructure.
No attacks on energy installations have been reported since a partial agreement announced by the United States, marking a pause in hostilities targeting critical infrastructure.
During a visit to Guyana, U.S. Secretary of State Marco Rubio announced that any Venezuelan attack on the territory or oil infrastructure of Guyana would trigger a military response, heightening regional tensions.
US Secretary of State Marco Rubio launches meetings with Caribbean leaders to discuss energy security, trade pressures and regional instability, including in Haiti and Guyana.
US Secretary of State Marco Rubio launches meetings with Caribbean leaders to discuss energy security, trade pressures and regional instability, including in Haiti and Guyana.
Hungary’s Foreign Minister travelled to Moscow for talks with Russian authorities on energy security, reinforcing a strategic energy partnership already bolstered by record gas and oil deliveries in 2024.
Hungary’s Foreign Minister travelled to Moscow for talks with Russian authorities on energy security, reinforcing a strategic energy partnership already bolstered by record gas and oil deliveries in 2024.
Donald Trump imposes 25% tariffs against importers of Venezuelan oil, particularly targeting China, which has already condemned an infringement on its economic sovereignty, signaling increased tensions in global energy markets.
Donald Trump imposes 25% tariffs against importers of Venezuelan oil, particularly targeting China, which has already condemned an infringement on its economic sovereignty, signaling increased tensions in global energy markets.
The planned visit of senior US officials to Greenland sparks political backlash in Nuuk, as no new government has been formed since the 11 March elections.
Starting 2 April, the United States will apply a 25% customs duty on all goods from countries trading with Venezuela’s oil or gas sector, Donald Trump announced.
Starting 2 April, the United States will apply a 25% customs duty on all goods from countries trading with Venezuela’s oil or gas sector, Donald Trump announced.
Washington imposes sanctions on Luqing Petrochemical, the first independent Chinese refinery targeted for its alleged ties to Iranian oil, as part of its intensified economic pressure campaign against Tehran.
Washington imposes sanctions on Luqing Petrochemical, the first independent Chinese refinery targeted for its alleged ties to Iranian oil, as part of its intensified economic pressure campaign against Tehran.
A Panama-flagged vessel suspected of belonging to the Russian shadow fleet was detained by German customs after suffering an engine failure in the Baltic Sea in January.
A Panama-flagged vessel suspected of belonging to the Russian shadow fleet was detained by German customs after suffering an engine failure in the Baltic Sea in January.
Amidst war and geopolitical uncertainty, Ukraine must choose between European influence and the strategic promises of the United States, a choice that could redefine its economic and security future, particularly in terms of natural resources.
As Russian gas deliveries via Nord Stream have ceased, Europe is exploring possible solutions to repurpose or replace this major infrastructure within a complex energy transition and diversification of supply sources.
As Russian gas deliveries via Nord Stream have ceased, Europe is exploring possible solutions to repurpose or replace this major infrastructure within a complex energy transition and diversification of supply sources.
Donald Trump and Vladimir Putin are set to discuss the sharing of rare earth resources in Ukraine on Tuesday, including energy production plants and territories rich in raw materials. These resources are at the heart of the ceasefire negotiations.
Donald Trump and Vladimir Putin are set to discuss the sharing of rare earth resources in Ukraine on Tuesday, including energy production plants and territories rich in raw materials. These resources are at the heart of the ceasefire negotiations.
UK Energy Minister Ed Miliband met Chinese officials in Beijing to discuss energy cooperation and reducing greenhouse gas emissions, despite disagreements over Hong Kong, forced labour, and the war in Ukraine.
UK Energy Minister Ed Miliband met Chinese officials in Beijing to discuss energy cooperation and reducing greenhouse gas emissions, despite disagreements over Hong Kong, forced labour, and the war in Ukraine.
The European Union has announced a €4.7 billion investment to support South Africa’s energy transition. This initiative is part of a broader strategy of economic cooperation and strategic repositioning of international partners.
American and Vietnamese companies have signed several commercial agreements totaling $4.15 billion, primarily in the energy and aviation sectors, aiming to reduce the trade imbalance between the two countries.
American and Vietnamese companies have signed several commercial agreements totaling $4.15 billion, primarily in the energy and aviation sectors, aiming to reduce the trade imbalance between the two countries.
Presidents Vladimir Putin and Nicolás Maduro announced an agreement to expand their cooperation, particularly in the energy sector. This initiative comes amid increased U.S. sanctions against Caracas.
Presidents Vladimir Putin and Nicolás Maduro announced an agreement to expand their cooperation, particularly in the energy sector. This initiative comes amid increased U.S. sanctions against Caracas.
A tripartite meeting between China, Russia and Iran will be held in Beijing to address the Iranian nuclear dossier as tensions surrounding Iran's nuclear programme continue to rise.
A tripartite meeting between China, Russia and Iran will be held in Beijing to address the Iranian nuclear dossier as tensions surrounding Iran's nuclear programme continue to rise.
Donald Trump applies his negotiation methods to the energy sector, leveraging tariffs and targeted statements to influence markets and trading partners. Behind these decisions lies an ambiguous commercial strategy blending bluff and concrete actions.
Newcleo and Danieli have signed a strategic agreement to integrate advanced nuclear reactors into steel production processes, aiming to eliminate fossil fuel use amid rising energy costs in Europe's industrial sectors.
Newcleo and Danieli have signed a strategic agreement to integrate advanced nuclear reactors into steel production processes, aiming to eliminate fossil fuel use amid rising energy costs in Europe's industrial sectors.
The U.S. Secretary of Energy has announced a strategic shift towards fossil fuels, abandoning several climate-related policies from the previous administration, creating uncertainty among energy professionals about long-term market stability.
The U.S. Secretary of Energy has announced a strategic shift towards fossil fuels, abandoning several climate-related policies from the previous administration, creating uncertainty among energy professionals about long-term market stability.
The United States has decided not to renew Iraq’s exemption, granted since 2018, allowing Baghdad to import electricity from Iran despite U.S. sanctions. This measure increases pressure on Iraq, whose energy supply largely depends on its neighbour.
The United States has decided not to renew Iraq’s exemption, granted since 2018, allowing Baghdad to import electricity from Iran despite U.S. sanctions. This measure increases pressure on Iraq, whose energy supply largely depends on its neighbour.

Advertising