Europe Buys More Russian Gas Despite Strained Relations

Authored by Tsvetana Paraskova via OilPrice.com,

The West-Russia relations have reached a new low since the Cold War amid the spy poisoning scandal in the UK, allegations of Russian meddling in elections, and fresh U.S. sanctions on Russia.

Yet European countries continue to buy increased amounts of Russian gas, and Russia’s state-held gas giant Gazprom is boosting production and exports, and is obtaining approvals in individual countries for its Nord Stream 2 gas pipeline that has divided the EU over fears of a tightening Russian grip on gas supplies.

In recent months and weeks, Gazprom has taken advantage of high demand in Europe and of decreased gas supplies to Europe from Russia’s competitors, Maxim Rubchenko writes for Russian news agency RIA Novosti.

Russia - which already supplies around one-third of Europe’s gas - boosted deliveries in the winter, one of the coldest winters in Europe in the past decade, and continues to ship higher volumes even after the winter, as gas importing countries replenish gas storage supplies that had been drained amid the cold snaps.

Alexander Medvedev, Deputy Chairman of Gazprom’s Management Committee, said at the end of April that the Russian company was currently shipping as much gas to Europe as it typically does in winter months, and expects demand this summer to be close to winter levels.

Gazprom gas deliveries to Europe reached an all-time high in March, beating a previous record from January 2017, the Russian company says. In the first quarter of this year, Gazprom’s gas supply to Europe increased by 6.6 percent compared to the same quarter last year. Gazprom’s gas deliveries to European countries continued to grow in April, even after the winter heating season ended.

Demand in Europe has stayed high after the winter ended. First, because gas storage levels were low, and second—because some of the other traditional gas-supplying countries have decreased supplies over issues or maintenance at facilities.

Norway, Russia’s closest competitor, had to cope with an unplanned outage at the Skarv gas field and Kollsnes processing plant in April. Flows to Europe were reduced after a compressor at the Skarv field in the Norwegian Sea failed.

In the south, Libyan gas flow from the Greenstream pipeline to Italy was stopped on April 2 due to maintenance to integrate gas from a new phase of development at the offshore gas field Bahr Essalam. The maintenance was initially expected to be completed in two weeks, on April 18, but the resumption of gas supplies has been postponed several times, so Italy received no gas from Greenstream for the whole month of April.

Total African pipeline exports to Europe dropped in the last week of April on a continued Libyan outage and reduced Algerian gas deliveries.

While Gazprom is boosting supplies to Europe even after the winter, it has received permits from Germany to build the Nord Stream 2 pipeline and a first permit for the project in Finland. Gazprom has also completed the deepwater pipelay for Line 1 of the TurkStream offshore gas pipeline planned to connect Russia to Turkey across the Black Sea.

Meanwhile, Gazprom’s seven-year-old dispute with the EU on antitrust issues may soon be coming to an end. According to Bloomberg sources, the EU could announce as early as in May a settlement with the Russian company under which Gazprom could agree to binding pledges to allay antitrust concerns, which could put an end to the antitrust investigation that started in 2011.

Despite high political tensions, Russia continues to boost gas supplies to Europe, and Europe continues to buy.

Comments

francis scott … Thu, 05/10/2018 - 03:37 Permalink

The real strained relations are between the US and the EU

and not between the EU and Russia. Most of the EU want

to end the sanctions on Russia but are being forced to put

up with them, lest the US sanction the EU members who

violate the US sanctions on Russia. 

Joe Trader francis scott … Thu, 05/10/2018 - 03:52 Permalink

Yeah....but LNG ports are popping up all over the place, Croatia, Lithuania, Poland. A new natgas pipeline's going to be built from Norway to Poland - which is able to supply all of central and eastern Europe with gas. Nuclear plants are coming online in eastern Europe, solar and wind projects..

Same story applies to oil: Saudis will start supplying eastern Europe with more oil (days at sea is almost the same as S.arabia to US). There's a new LNG/oil port right on the German/Polish border, and it's even scheduled to receive LNG shipments from the US!

Nord stream 2: this article paints a pretty picture, however more legal challenges are being filed against Gazprom, so the bid to stop Nord Stream 2 isn't over just yet.

In reply to by francis scott …

HenryHall Vido Thu, 05/10/2018 - 04:52 Permalink

More Russia LNG export terminals are coming online. Russian LNG may be a lot more expensive than Russian pipeline gas, but to Europe it is still cheaper than LNG from Qatar or US. However much of the Russian LNG can be expected to be exported to the Far East so the price competition may not be all that great.

Pipeline gas through Ukraine is expected to decrease by 90% from January 2020 onwards.

It all comes down to how keen are the EU Europeans to pay higher prices in order to score political points for essentially the same gas. Moscow is still the largest city in Europe.

In reply to by Vido

doctor10 HenryHall Thu, 05/10/2018 - 05:43 Permalink

THE single best thing US could do would be to form a new OPEC with USA at the head. Comprised of all the worlds petroleum/NG producing and exporting nations, and extending the "exorbitant privileges" of the petrodollar to their country providing they ALL use the USD as their currency internally and externally, it would frame the 21st century.

In reply to by HenryHall

philipat researchfix Thu, 05/10/2018 - 06:46 Permalink

When will Europe grow a pair and stand up against Washington in its own best interests. The refugee problem is a result of Washington's policies in the ME and Washington's sanctions on Russia have hurt nobody but Europe (Not even Russia). And now Washington wants Europe to buy LNG from a questionable long-term source (US shale) at double the price of Russian piped gas?  It's time for Europe to develop its own independent foreign policy and tell the US to go fuck itself?

It's only the constant propaganda that makes many sheeple in Europe believe that there are "Reds under the bed". In reality, Russia is not an enemy of Europe and could be a great synergistic trade partner. Which Washington, of course, understands perfectly.

In reply to by researchfix

BarkingCat philipat Thu, 05/10/2018 - 11:03 Permalink

It is very easy to hold back these hords.....if you have the will to do it.

Let's use Sweden as an example. If Sweden decided to reverse the policies of the last few decades they would simply issue an order for any non European to leave the country.

Give them 6 months to set their affair in order and after that date arrest on sight and deport them immediately. If some shithole neighborhood ignores the order, then use the military to isolate it and remove them. If the non natives attempt to resist using violence, give the military orders to shoot.

 

It can be done but it requires the will to do it and to tell the rest of the world to fuck off and mind their own business. 

In reply to by philipat

HenryHall researchfix Thu, 05/10/2018 - 12:06 Permalink

>> So, if nothing leaves Ukraine, the input will be simply cancelled.

I don't think so, not cancelled but not at Russia's risk of loss either.

Will, for example, Poland pay the same price for gas at the Russia/Ukraine border as they pay at the Poland/Germany border? Given that if they use Ukraine transit (1) there are more risks (2) transit fees have to be paid additionally and (3) it must be prepaid in US dollars as contrasted with paying in Euros on 30 days' free credit.

Gas transit through Ukraine will be allowed but at an uncompetitive price.

In reply to by researchfix

halcyon Joe Trader Thu, 05/10/2018 - 09:47 Permalink

You haven't got a fucking clue what you are talking about. Take a look at what is the m3 capacity of piped natgas and count how many % of that can you scram through LNG terminals and gas pipelines that aren't at the ports yet.

Come back in 20 years.

In reply to by Joe Trader

keep the basta… Thu, 05/10/2018 - 04:25 Permalink

a larger quake on the west coast of usa is expected fairly soon and the  pressure coming across the west will very likely break the fracking liners releasing the high pressure innards sideways so as to cause more breakages in the fracking  lines.

This surely will impact usa  frack production . Russia supplied Boston last year and then the usa allie the saudis will supply no doubt.

Iconoclast Thu, 05/10/2018 - 05:44 Permalink

Iran and Russia have over 50% of the easily recoverable oil and gas reserves on planet Earth, it’s a coincidence that the globalists and bankster hawks and other assembled psychopaths want to bring both countries to their knees. 

The uk needs to realise that they’re pwned by Russia, without that supply the lights and fires go out and you can’t  win a fight with the Russians, on any level. 

Let it Go Thu, 05/10/2018 - 06:15 Permalink

Ukraine is a financially failed state and while we can point to its potential, its massive oil and gas reserves by all rights should belong to the people and for their benefit. The IMF, however, points out that Kiev needs billion in loans and grants just to stabilize its economy after more than twenty years of massive levels of corruption. The article below contends the war in Ukraine is about America wanting to sell LNG to Europe and seems willing to start a war to make it happen rather than Russian aggression.

 http://Ukraine War Is About Money Energy And Power.html

SmittyinLA Thu, 05/10/2018 - 06:20 Permalink

It's bend over time for the EU, Russia is surfing their stupid wave, as long and the EU and US keep printing, Russia will keep selling http://www.autonews.com/article/20130711/OEM01/130719957/ford%3A-europe…

There's quite a herd of parked VWs in California, now decaying because they had to fudge emissions a tiny bit to sell their agenda, now they're getting raped by their own agenda.

They should sell all those VWs to Iran but instead they'll let 'em rot.

Germany is now an avant-guarde art project, a freak show with Deutche Bank the center attraction.

activisor Thu, 05/10/2018 - 07:40 Permalink

In the end simple economic realities trump (no pun intended) geopolitical pressures.  Europe needs cheap energy and Russia can provide it with a proven and reliable supply chain. It is a shame that stupid British politicians are putting geopolitics first.

BarkingCat activisor Thu, 05/10/2018 - 11:41 Permalink

Britain has fucked with Russia for centuries.  This is nothing new.

They even attacked Russia militarily because Russia was kicking the Ottoman Empire's ass and was likely to capture Constantinople. The fucking Brits found it preferable for the Islamic plague that has been invading Europe for centuries to hold the city and thus the straight that leads into the Black Sea, than the Russians. 

 

In reply to by activisor

numapepi Thu, 05/10/2018 - 10:29 Permalink

Amazing this article is all about why the Syrian war is going on in the first place, yet it speaks nothing of that conflict or it's origins, in Europe's needing a way to bypass Russian nat gas.

hanekhw Thu, 05/10/2018 - 11:03 Permalink

What WAS the average temperature in Western Europe last winter and what WAS the % increase in consumption and what are their current sources? No mystery here about the EU/Russian relationship driven by energy.

abgary1 Thu, 05/10/2018 - 14:36 Permalink

There was a reason why the west wanted a regime change in Syria and that was to run a nat. gas pipeline from the Arabian peninsula through Syria and Iraq to Europe to end Putin's monopoly.

Funding Putin's military via nat. gas purchases will not end well.