Gazprom, the state energy giant, has been fulfilling its contractual obligations but little else, according to researchers, with the amount it sells on the European spot market having plunged dramatically.
According to Dr Jack Sharples, an expert at the Oxford Institute for Energy Studies, 2019 was a record year for Gazprom in terms of sales to Europe.
Demand then cratered last year as the coronavirus shut down entire countries, before rebounding in 2021 as economies reopened. Yet Russian supplies didn’t bounce back in tandem.
A spokesman for Gazprom said the company “supplies gas in accordance with the customers’ requests in full compliance with the current contractual obligations”.
Sharples’ Institute recently highlighted that Russian supplies to Europe from January to November were almost equal to the same period in 2020 – and 21pc below 2019 levels.
Further analysis of Gazprom figures by the Telegraph found that, so far, its supplies to the EU this month are 22pc below 2020 levels, and 33pc below 2019.
This supply reduction has left the European market exposed. Recent price swings hinge on any piece of news about whether Russian flows will rise or fall.
At first Sharples and his team wondered whether, like Europe, the Russians had been struggling to replenish their storage levels – perhaps there was simply not enough gas to go around. But that theory doesn’t seem to hold, after Gazprom announced it would no longer need to continue topping up these facilities after November 8.
Gas flows across the Ukrainian border also remain massively down compared to previous years with some experts suggesting this could be a geopolitical pressure tactic by Vladimir Putin.
Moscow wants EU regulators to approve the Nord Stream 2 pipeline to Germany, which western leaders fear would allow them to divert further flows away from Ukraine – just as Putin is amassing his troops at the border.
Sharples says it could also be Gazprom flexing its monopolistic muscles, using the tight market to keep prices high.
‘Whether they are doing it to put pressure on Europe, or simply because it is commercially advantageous, is still not clear,” Sharples says. “They now appear to be deliberately withholding volumes to the European spot market.”
That could backfire if Gazprom tests Europe’s patience too much, or if too many firms go bust. It could also drive investment in alternative sources of energy, such as renewables, as countries seek to break their gas addictions more quickly.
Will Webster, an expert at Oil and Gas UK, says it has policy implications closer to home as a debate rages over whether to halt production in the North Sea.
“The question is, do you want to make it harder to produce this stuff yourself, or use the resources this country still has?” he adds.
It is a question ministers will no doubt be pondering as they try to plot a way out of the crisis.
