EC slams Russia over gas 'weaponization', points to market investigation

The European Commission is concerned about the "weaponization" of gas supplies by Russia and has pledged to continue to back the role of Ukraine as a transit country for Russian gas, a senior EC official said late Jan. 31.

EC Executive Vice-President Valdis Dombrovskis, speaking during a press conference in Kyiv, also said the EC was looking into whether state-controlled Gazprom had acted according to EU energy market rules.

"We see that there is a certain pattern and tactics in Russia's actions in regards to the weaponization of gas supplies," Dombrovskis said.

"Currently, despite very high demand for gas in the EU, Russia is not stepping up supplies," he said.

"Clearly there is certain action from Russia's side which triggered the European Commission's investigation into whether Gazprom is in this situation acting in line with market principles."

Russian gas supplies into Europe slowed in the second half of 2021 despite record high prices, with deliveries falling further in the first weeks of 2022.

In a statement on Jan. 15, Gazprom said its gas exports to non-CIS countries in the first half of January totaled 5.4 Bcm -- or an average of just 360 million cu m/d.

That is more than 40% lower than the average in January 2021 of 626 million cu m/d.

Russia has been accused before of using gas as a weapon to achieve foreign policy aims, though Gazprom has always insisted that it meets all its contractual obligations in full.

"This problem of weaponization of gas flows is not new," Dombrovskis said.

Nord Stream 2

He added that the EC had been "very clear" that any new project developments within the EU should not come at the expense of gas transit through Ukraine, a reference to the 55 Bcm/year Nord Stream 2 pipeline.

"The certification of this pipeline is currently on hold, and the Commission has been clear throughout that this project is not in line with the goals of EU's energy policy," he said.

The German energy regulator, the Bundesnetzagentur, has yet to resume the certification process of the operator of the pipeline, having suspended it in mid-November.

The four-month process, which began in early September, will resume once the regulator is satisfied that the actions around transferring assets to a new German subsidiary are completed.

The European Commission also has up to four months to issue a decision, after which time it is returned to the Bundesnetzagentur, which has a further two months to publish its final opinion.

Nord Stream 2 this month completed the establishment of the new German subsidiary called Gas for Europe GmbH, but it remains unclear when the regulator will resume the certification process.

European gas prices remain at historic highs, with low Russian supplies and a protracted certification process for Nord Stream 2 significant contributors to the recent price strength.

The TTF day-ahead price hit an all-time high of Eur182.78/MWh on Dec. 21, an increase of 985% year on year, according to S&P Global Platts price assessments.

Prices have cooled since, though they remain at historic highs. The TTF day-ahead contract was assessed Jan. 31 at Eur83.08/MWh, still a year-on-year increase of 300%.

Alternative supplies

Tensions between Russia and the West over Ukraine have also contributed to the high prices in recent weeks and there remains concern that Russian flows could be disrupted if there is any escalation of the crisis.

Josep Borrell, the EU's High Representative for Foreign Affairs and Security Policy, said Jan. 30 in his blog that Brussels was prepared "in case diplomacy fails" and that all options were being considered.

"This includes improving our resilience, including by working with partners like the US, Qatar and Azerbaijan on the issue of gas supply in case Russia decides to reduce or halt deliveries," Borrell said.

Europe's energy commissioner, Kadri Simson, said Jan. 22 she would attend a ministerial meeting of the Southern Gas Corridor countries in Azerbaijan on Feb. 4 and a meeting of the US/EU energy council in Washington on Feb. 7 as she continued talks with partners over the potential for additional gas supply.

Azerbaijan supplies around 10 Bcm/year of gas to Italy, Greece and Bulgaria, via the Southern Gas Corridor, while the US and Qatar are key suppliers of LNG to Europe.