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Russian gas: eastward or westward?

Let it be clear. Russia is honouring its long-term gas contracts. Gazprom has only stopped selling gas in short term. Nobody can force it to do that

By: N. Peter Kramer - Posted: Wednesday, February 9, 2022

Russia wants to work more with long-term contracts, not illogical, the company wants certainty.
Russia wants to work more with long-term contracts, not illogical, the company wants certainty.

N. Peter Kramer’s Weekly Column

Let it be clear. Russia is honouring its long-term gas contracts. Gazprom has only stopped selling gas in short term. Nobody can force it to do that. Russia wants to work more with long-term contracts, not illogical, the company wants certainty. The Green Transition, which should take the EU completely off gas in the future, is an almost existential threat to Russia. That is why Gazprom is investing more and more in gas fields and pipelines to transport gas eastwards, to China. Better connections with China in the future - last week the Russian and Chinese leaders Putin and Xi signed comprehensive deals for energy deliveries – could potentially hurt the EU.

In the beginning of 2009, some EU member states felt that Moscow had turned off the gas because of a conflict with Ukraine, that didn’t want to pay the gas bill. But no lessons were learned. EU independence on Russian gas has increased. Ten years ago Russia accounted for 30 percent of EU gas imports, that has now risen to 40 percent. At the same time, the share of ‘own EU gas’ has shrunk considerably. In just five years, it went from 24% to 9% according to a study by the think tank Bruegel. EU gas stocks are historically low. Figures from the Gas Infrastructure Europe sector show that they were roughly 40 percent full at the end of January, compared to almost 60 percent at that point in the winter in recent years.

The EU dependence on Russian gas varies enormously from memberstate to memberstate. Nobody buys more than Germany. If the new Nord Stream 2 pipeline is completed, Germany’s dependence on Russian gas will increase further, from more than 40% to 80%. Countries such as Finland, Slovakia and Austria buy almost all their gas from Gazprom. Spain, at the other hand, does not buy any Russian gas at all. A system of solidarity is built in the EU crisis structure. If a memberstate is in need, then it must get help. Citizens take precedence over companies. Can you imagine, that France would paralyse its industry to keep German families warm? Especially if you know that the French supplies are in order and the German ones are not? That could be a very sour story.

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