Europe is in the middle of another financial crisis with natural gas prices soaring throughout the continent. Both the Kremlin and Gazprom, the Russian state-owned energy corporation and Europe’s greatest supplier of natural gas (NG) have repeatedly said Russia is meeting all gas supply requirements from European customers.
Russia Seems to Be Causing a Supply and Demand Problem
But according to Reuters, European customers are saying that’s not the case. European governments are demanding that Gazprom be investigated for not shipping more gas, allegedly as method to blackmail Europe to secure regulatory permissions for building the new Nordstream pipeline from Russia to Germany.
Gazprom presents gas exports and production data monthly. According to Reuters calculations, the data demonstrates gas exports outside of the former Soviet Union declined almost 1 billion cubic meters (bcm) within the last month. The financial implications are huge for Europeans as prices continue to soar.
Then There’s the Russian Troops on the Ukrainian Border…
Nearly simultaneously, there is a renewed buildup of Russian troops near the Ukrainian border, raising concerns by the United States and Europe governments, who are tracking irregular movements of equipment and personnel on Russia’s western flank. As discussed in the earlier ClearanceJobs article Russia versus Ukraine, a build up in the spring left considerable heavy military equipment in place after troops departed. Troops have now fallen in on this equipment. The Kremlin is thought to be taking a tougher stance on the Ukraine, with President Vladimir Putin attacking Kyiv’s Western ties, warning NATO military expansion on Ukrainian territory is a “red line” for Moscow.
Oleksiy Danilov, secretary of Ukraine’s national security and defense council, estimates the number of Russian troops deployed around the Ukrainian border at 80,000 to 90,000, not including the tens of thousands stationed in Crimea. Ukrainian officials see these moves as a way for Moscow to keep the situation tense and uncertain.
In addition to shrugging off international opposition on Crimea and the Ukraine, claiming the latest movements are just another exercise, Russia is now having to respond to the growing natural gas problem. The view among European capitals is that Gazprom has been stoking the continent’s energy crisis by withholding exports of natural gas. Sergei Ryabkov, Russia’s deputy foreign minister, recently discussed Europe’s natural-gas market crisis, stating Russia favors stability and lower prices over runaway markets. Ryabkov stated, “We would prefer to have here a bear market.” However, Russian gas profits continue soaring in conjunction with elevated prices around Europe.
According to Russia, domestic usage is up. Russia says Gazprom has to focus on domestic gas market as the heating season in the European part of Russia began in mid-September, two weeks before the usual period.
Alexei Grivach of the pro-Kremlin think tank known as the National Energy Security Fund, stated last week that demand was abnormally high for this time of the year due to power generation in summer. Grivach also said that gas demand in Europe has fallen amid high prices. In recent weeks, Gazprom, has stated domestic gas supplies from the start of the year have jumped by almost 17%, while gas exports from year-to-date increased 13.1%.
As the European natural gas crisis continues to unfold and the troop build up continues, some analysts are saying the situation may merit particular attention. It may be simply explained as more saber rattling or a desire to exploit the situation for greater profit. But it could indicate Russia has lowered its threshold for what would prompt the Kremlin to act in Ukraine. Time will tell, but for now, tensions are running high.