The EU Digs Its Own Energy Grave Even Deeper

According to Entsog, the European Network of Transmission System Operators for Gas, the situation for Russian gas deliveries to Europe in the 35th week of 2022 was the following: with Nord Stream 1 and the Yamal pipelines delivering zero gas and with a reduced flow via Ukraine, Europe was lacking 2,258 million cubic meters of gas as compared to 2021, which were minimally compensated by an increase of 22 million cubic meters from Turkish Stream, via the Trans Adriatic Pipeline (TAP). Currently, only 570 million cubic meters of Russian gas are flowing to Europe through pipelines.

To fill the strategic reserves, energy companies in the EU have been encouraged by governments to buy gas on the spot market at astronomic prices, with the result that: 1. strategic reserves are filled, but they cover only half the energy demand; 2. companies have overexposed themselves financially and are on the verge of insolvency. 3. the increased demand for gas on the Amsterdam spot market has allowed speculators to drive the price even higher.

Not without a certain Schadenfreude, Gazprom noted on Sept. 2 that an energy crisis for Europe is guaranteed for the coming winter. Germany consumed 57 bn cubic meters of gas from Oct. 1 to March 31, 2021, for a a montly consumption of 9.5 bn cubic meters. Thus, current stock levels — 84% of capacity and 18.3 bn cubic meters — “are comparable to an average consumption of two months in the winter season“, Gazprom warned.

The situation in Italy is even worse. Consumer association Assoutenti reported on Sept. 5 that Italian strategic reserves, although filled at 82%, are barely enough to cover 45 days of winter consumption. After that there “will be chaos, with heavy rationing, frozen homes and a halt to activities for industries and businesses”. Gas deposits cover about 20% of Italy’s annual needs.

In France, strategic reserves are filled to 92%, but they only represent 50% of winter consumption, or two months autonomy as well. President Emmanuel Macron gave a speech on Sept. 5, announcing a policy of “energy sobriety”, which for instance will force companies to present plans to save 10% energy and other rationing plans. Additionally, France and Germany announced a plan by which France will provide Germany with gas in return for electricity in case of emergency. (Think of two naked people at the North Pole embracing one another to survive for a few minutes longer…)

On top of that, the EU is provoking Russia to turn off gas supplies completely. After the G7 decided to sanction Russian oil with a price cap, an over-enthusiastic Ursula von der Leyen declared that the EU should do the same with Russian gas. On Sept. 9, the EU Energy Ministers will decide on such a proposal. If the EU decides, on the contrary, to lift sanctions, Russia will resume gas deliveries, Moscow said. But that proposal has been roundly rejected.