Russia will cut the shipment of gas to Europe through Poland | International
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The Kremlin has decided to cut off one of the key routes that supply gas to the European Union. The state monopoly Gazprom has announced that it will suspend supply along the entire Yamal-Europe gas pipeline because the owner of the Polish section, EuRoPol GAZ, was sanctioned by Moscow on Wednesday night, and the government of Vladimir Putin demands that another company manage it. The Russian sanctions, imposed in response to the European ones, mainly affect Gazprom subsidiaries in EU territory, and have begun to be noticed this Thursday. The German authorities reported that Gazprom Germania has already stopped receiving gas.
This decision comes after Ukraine interrupted pumping through another pipeline that runs through its territory towards the community bloc, which has also begun to reduce the quantities of gas that reach Germany. Europe, which set itself the goal of reducing its imports of Russian gas by two thirds this year after Putin’s offensive in the neighboring country, has seen the price of gas skyrocket this day, which has climbed 20% in the TTF trading center in the Netherlands, the benchmark. Its cost has touched 114 euros per megawatt hour. That increase would be one of the objectives that the Kremlin seeks with the counter-sanctions, as suggested by the German Minister of Economy and Climate, Robert Habeck, and not so much to completely cut off the gas tap to Europe.
The Yamal-Europe gas pipeline is over 4,000 kilometers long and runs from Toryok, in western Russia, to the German city of Frankfurt am Oder, passing through Belarus and Poland. Its maximum capacity is 33,000 million cubic meters of gas per year, approximately what Spain consumes in a year, and 683 kilometers of its route run through Poland. The Russian state monopoly Gazprom was a shareholder of the owner of this section, EuRoPol GAZ.
the gas war launched at the end of last year between Europe and Russia had left the future of the Yamal-Europe gas pipeline in the balance. The pipeline had suffered several interruptions in its supply since December and was now used to carry Russian gas to Germany through Poland. Gazprom put another nail in the pipe coffin this week by announcing that it had reserved absolutely none of its supply capacity for the third quarter of this year.
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“(The Kremlin) has prohibited making payments and transactions with sanctioned entities, in particular Gazprom, which means the veto on the use of this gas pipeline,” explained a representative of the Russian company, Sergey Kuprianov. The company denounces that its former Polish partner “has repeatedly violated Gazprom’s rights” since April 26, when the Russian gas company fell under a new round of European sanctions. “We were prevented from exercising our rights to the shares and other securities of EuRoPol GAZ and receiving dividends,” the spokesman added.
The Russian government on Wednesday night approved a list of 31 legal entities from around the world that are subject to its sanctions. Among those sanctioned are not only American and European companies, but also from Asian countries such as Singapore. The greatest repercussion of these punitive measures is that they affect the former Gazprom subsidiaries in Europe, including several French and German ones, which will prevent these gas pipeline and gas deposit operators from maintaining their business with Russia.
The only alternative will be for other companies to take their place. Putin’s spokesman, Dmitri Peskov, stressed that “there will be no relationship with these companies, they have been banned and cannot participate (in the purchase of gas)”, although he left the door open for others to replace them. “You have to contact Gazprom for more details,” he added.
energy as a weapon
One of the countries affected is Germany, where Minister Habeck has already warned that rises in the cost of new supplies are coming. Several companies, including Gazprom Germania, currently under state tutelage, have already stopped receiving gas, about 10 million cubic meters per day – which is equivalent to approximately 3% of the total -, Habeck explained in the Bundestag, the German Parliament. At the moment, that amount is being supplied by other suppliers, especially Norwegian and Dutch companies. “We are monitoring the situation very closely, but Germany is prepared. We can make up for the lack of supply, but what is happening shows that energy is a weapon in this conflict,” he added.
The list of Russian counter-sanctions includes Germany’s largest gas storage facility, at Rehden in Lower Saxony, which has 4 billion cubic meters of capacity and is operated by Astora. The minister pointed out that the inclusion of the German subsidiaries of Gazprom means that other companies will have to sign new supply contracts that “will probably be concluded at higher prices”. The German government will provide financial guarantees to the companies that take on the new agreements. The bulk of the gas that feeds German industry continues to arrive through the Nord Stream 1, a gas pipeline that runs through the bed of the Baltic Sea.
Habeck noted that Germany could face an abrupt cut-off of Russian gas from next winter. “If we have full storage facilities, if two of the four floating liquefied natural gas (LNG) regasifiers that we have rented are already connected to the grid, and if we save significantly on the energy we consume, we could get through winter,” he said in a statement. interview in Wirtschaftswoche. Later, in an appearance at the ministry, he again asked for the collaboration of companies and citizens to try to reduce consumption by 10%. German gas deposits are at 38% of their capacity, a still low quantity that should improve throughout the summer to reach 90% in the autumn.
This week a major bottleneck has arisen in Russian gas pipelines. On May 10, the Ukrainian gas operator GTS reported that it would suspend supply to Europe through the Sojránovka station “due to force majeure”. A quarter of the Russian gas that crosses to Europe through Ukraine passed through this section, and kyiv requested to divert the pumping to another station that is under its control. Gazprom rejected the proposal on the grounds that it is “technologically impossible”.
In addition to the closure of several gas pipelines, Gazprom announced in early May that it would stop pumping gas directly to Poland and Bulgaria because these countries had refused to participate in the mechanism devised by the Kremlin to exchange payments in dollars and euros for rubles.
This system theoretically establishes that buyers pay their contracts in the agreed currency in an account of Gazprom’s financial arm, and Gazprom exchanges it for rubles on the Moscow Stock Exchange. However, Warsaw and Sofia were suspicious that this would serve Moscow in the future to question the signed contracts if tension with the rest of Europe escalated.
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