In the face of Europe’s gas crisis, the question of whether Russia is utilizing its “energy weapon” has appeared again. Critics argue that Russia has been purposefully undersupplying the European gas market to generate a crisis that would push Germany to a quicker certification of the recently completed Nord Stream 2 pipeline. We could thus also ask, does Europe face a security risk stemming from Russian gas imports?
One might point out that the ongoing liberalization of the European gas market together with the supply diversification is significantly limiting politically motivated “deployment” of the Russian energy weapon. Given the progressive globalization of the natural gas market as well, one of the main interests of Russia is probably to maintain its position as a (relatively) reliable gas supplier. This year’s launch of the TAP pipeline bringing Azeri gas to Europe and the inauguration of a new Croatian LNG terminal, the planned expansion of the Polish Świnoujście LNG terminal, or the forthcoming completion of the Poland-Slovakia interconnector – all of these projects might further contribute to the reducing of Russia’s motivation and ability to effectively politicize its natural gas exports. We might, however, expect Gazprom to pursue various economically motivated efforts to ensure its competitiveness among pipeline gas and LNG suppliers, especially U.S. LNG suppliers.
One should also consider the fact that even though Gazprom is the biggest natural gas supplier of the EU, accounting for over 40 % of its gas imports, it is not only Europe that seems to be, to a certain extent, dependent on Russian pipeline gas. As Mitrova (2014) points out, exports of this commodity account for a considerable share of Russia’s exports, having a significant growth potential in the event of expected oil exports decline. Given that despite Gazprom’s efforts to diversify its supply markets, the company expects its western exports by the end of 2030 to still account for 70 % of its total exports, Russia seemingly is and for the near future will continue to be dependent on Europe as a natural gas consumer as well. The European gas market might simply be too important for Russia to deliberately jeopardize its strong but challenged market position by the politically motivated deployment of the “gas weapon.”
Yet how to make sense of the current situation mentioned above? Is Russia pressuring Germany over the controversial gas pipeline, possibly trying to subvert its certification process, by restricting its gas exports to Europe?
Concerns seem to be partly related to the end of summer’s slow-down of Russian pipeline gas supplies to Europe, where at the westernmost part of the Yamal pipeline, gas flows dropped to 20 mcm/d in mid-August – down from 49 mcm/d in late-July and from its typical 81 mcm/d rate. However, EU’s Energy Commissioner Simson and some of the top European clients such as Eni, Uniper, OMV, and RWE have confirmed that Russia is meeting its contracted commitments.
But Gazprom is not providing additional supply. It is unclear whether European consumers with LTCs have or have not asked for more gas. Regarding the spot market, Gazprom “has only booked about a third of transit capacity offered for October via the Yamal-Europe pipeline and no extra transit capacity via Ukraine.” To what extent it is a result of production limitations and growing domestic needs or an attempt to exacerbate the European gas crisis and pressure Germany into the Nord Stream 2 certification remains unclear. We should note, though, that Gazprom isn’t commercially obligated “to supply Europe’s spot market.”
When it comes to the gas-crisis-manufacturing accusation, one can hardly deny the role of other than Russian influences that might have contributed to the current situation as well, including little wind power generation, cold end of the past winter, high LNG demand in Asia, or economic rebound after the pandemic restrictions have eased. We shall see whether there has been a “deliberate market manipulation” and “violation of EU competition rules” once the European Commission responds to the letter of ca. 40 MEPs calling for the investigation of Gazprom’s role in the European gas crisis. What this ambiguity shows us, however, is that even though we have assumed a relatively low probability of Russia deliberately jeopardizing its competitiveness within the European gas market by using its gas exports as a political weapon, there might still be a certain maneuvering space for the supplier to potentially cause a turmoil while not crossing critical thresholds. It is up to Europe to effectively progress with its decarbonization as well as liberalization and diversification activities and to ensure the adaptation as well as enforcement of its energy legislation in order to avoid being maneuvered.