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Monday, August 15, 2022

Russian Gas Policies Hurting Europe – IEA

Russia faced fresh criticism Wednesday as the International Energy Agency (IEA) accused it of squeezing gas supplies to Europe and accentuating an energy crisis across the continent. 

Prices for gas have soared this winter in Europe, with wholesale prices standing five times higher than last year in a number of countries.

Moscow has been blamed for withholding shipments to Europe during a cold snap last year and keeping gas storage facilities low. The Kremlin and Gazprom, Russia’s monopoly gas exporter, have denied any wrongdoing, and said Europe should have struck multi-year contracts if it wanted to secure stable energy supplies, rather than relying on short-term market prices.

Fatih Birol, director of the influential IEA, said Wednesday that Russia could boost gas supplies by at least a third but is choosing not to.  

“There are strong elements of tightness in the European gas market due to Russia’s behavior,” Bloomberg quoted Birol as saying. “The current storage deficit in the European Union is largely due to Gazprom.” 

It calculated Russian supplies to Europe were down 25% from 2020 levels in the fourth quarter of 2021, and were 22% below pre-pandemic levels.

The IEA is an organization which represents 30 major economies, most European, and advises them on global energy policies. Russia is not a member.

With gas prices at record highs across the continent, the IEA pointed out that Gazprom would stand to benefit from increasing supplies to Europe and selling more on the so-called spot market, but is instead refusing to do so.

The criticism renews a bitter war of words between Russia, the EU and U.S. over whether Russia is abusing its role as Europe’s main energy supplier to secure final approval for its controversial Nord Stream 2 pipeline. 

That initiative, led by Russia’s Gazprom, has been thrown into new uncertainty in recent days, with U.S. officials saying it would work to block the pipeline from ever going live if Russia invades Ukraine.

Sweden became the latest individual country to criticize Russia’s gas policies Wednesday. The Scandinavian country’s energy minister set aside more than $600 million in government funds to help households deal with rising energy costs and said Russia was partly to blame for the high prices and economic hardship. 

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