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Russia Hasn’t Raised Gas Supply To Europe Despite Putin’s Promise

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Russia has not materially increased natural gas supply via its pipelines to Europe, despite assurances from Russian President Vladimir Putin that Gazprom would start sending more gas after it completes filling Russian storage.

In November, Russian gas supply to Europe was volatile, as gas flows on the Yamal-Europe pipeline via Belarus to Poland and Germany were low or non-existent on some days, and at times reversed to flow eastward from Poland.

The uncertainty over how much additional volumes Gazprom would ship on top of its contractual obligations has kept European benchmark gas prices volatile over the past month.

The market was expecting increased Russian flows on November 8, the date which Putin had given for Gazprom to potentially increase supplies after filling up Russia’s storage. When higher flows from Russia failed to materialize on that date, natural gas prices in Europe spiked.

Gazprom has not booked materially higher extra capacity to Germany and Ukraine either. The company says that it continues to fulfill all contractual obligations, and earlier this week, it said that its exports to Europe rose by 6.6 percent between January and November.

While the European market was wary of volatile day-to-day supply from existing Russian pipelines, the Federal Network Agency of Germany, Bundesnetzagentur, suspended on November 16 the procedure to certify Nord Stream 2 AG as an independent transmission operator until an operator of the pipeline in Germany is incorporated under German law.

Russia’s inconsistency in booking extra capacity on pipelines to Europe and the volatile supply over pipelines in recent weeks could continue for months, as it is likely linked to the Nord Stream 2 approval, Poland’s Climate and Environment Minister, Anna Moskwa, told Bloomberg in an interview this week.

“Until the issue of Nord Stream 2 is finalized, we cannot be sure of Gazprom’s behavior,” the minister said. “We’re convinced this is a mechanism linked to the certification process. And the certification process will still take some time,” she added.

By Charles Kennedy for Oilprice.com