Dynamics on the European gas market have become one of the central subjects of the global energy sector development. The situation started getting out of control as far back as summer. After the ordeal of a global lockdown in 2020, the pricing pendulum swung back. Prices for natural gas in Europe broke all-time records, dragging along with them quotations for coal and even oil. The Europeans began to view the situation as a full-scale energy crisis. Meanwhile, the heating season is far from its end.
Gazprom as the largest supplier of natural gas to European markets has found itself to be the focus of a major discussion with the eternal Russian questions: who is to blame and what is to be done.
European politicians accuse the Russian company of attempts to exert pressure on Europe with the aim of speeding up Nord Stream 2 certification. They demand that dependence on Russia for gas be reduced and that more Russian gas be supplied to the markets at the same time.
Gazprom points out that it fully honours its long-term contracts and that it is quite difficult physically to sell gas on the spot market at the current prices. Actual consumers cannot pay for gas at such prices, but prefer to withdraw it from storage.
Also, Gazprom draws attention to an unprecedented rise in demand on the domestic market where it is driven by development of community gas supply, increase in autogas consumption, and natural gas processing projects.
Besides, a boom in demand for natural gas continues in neighbouring China, which promises intensification of talks on co-operation in this area between Moscow and Beijing. Gazprom is trying to respond to the European policy of diversification of suppliers by encouraging competition for its resources.
The unique situation on the European gas market and the one in which Gazprom finds itself are discussed in detail in the new report of the National Energy Security Fund.
You will find in the report answers to the following questions:
What has happened in the EU, UK, and Turkish gas markets in the last ten years
- Demand and import dynamics
How European administrators have seen the role of natural gas in energy transition and what regulatory practices gas sellers have faced
- Taxation on the gas business and incentives to renewable energy generation and consumption
Gazprom’s export position in Europe
- Sales dynamics
- Gazprom’s shares of key markets
- Main partners of the Russian corporation
Volume of Gazprom’s long-term contracts
- Transformation of the pricing system for Russian gas
- Spot basis versus long-term contracts
Diversification of delivery routes
- Comparison of old and new export corridors
- What awaits Nord Stream 2
Situation in the domestic gas market
- How much gas Gazprom has for export
- Yearly financial performance of the corporation
Prospects for a new contract with China
Contents of the report:
INTRODUCTION | 3 |
CHAPTER 1. GLOBAL PRICES SOARING. HARD FACTS AND IDLE THEORIES | 4 |
1.1 Role of Gas in EU, United Kingdom & Turkey | 4 |
1.2 EU and UK Gas Balances | 12 |
1.3 Dynamics of Gas Prices in Europe | 15 |
1.4 Perfect Storm | 19 |
1.5 Gas Balance and Prices for Gas in Turkey | 25 |
CHAPTER 2. GAZPROM’S EXPORT POSITION IN EUROPE. SEARCHINGFOR BALANCE | 30 |
2.1 Overview of Gazprom’s Export to Europe and Turkey | 30 |
2.2 Structure of Contracts and Pricing System in Europe | 36 |
2.3 Diversification of Delivery Routes and Gas Supply Security | 43 |
2.4 Gazprom’s Gas Balance | 47 |
CHAPTER 3. LESSONS AND IMPLICATIONS OF PRICING CRISIS | 51 |
3.1 Nord Stream 2 | 52 |
3.2 COP26 in Glasgow and Emission-free Gases Directive | 53 |
3.3 Power of Siberia 2 and Processing in Ust-Luga | 55 |
Date of release: | February 18, 2022 |