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The head of the Ukrainian state-backed pipeline company said Russia’s refusal to send additional gas supplies to Europe was “blackmail” because fuel prices had risen to a 13-year high.
Sergiy Makogon, General Manager of the Ukrainian Gas Transmission System Operator, says he believes Gazprom in Russia was mandatory going back refusing to send additional volumes of gas supplies from Europe via Ukraine in an attempt to encourage the acceptance of the conflicting Nord Stream 2 pipeline from the Baltic to Germany.
“[Europe] Gazprom should not continue this blackmail with prices, “Makogon told the Financial Times, arguing that Russia could soften the doubling of gas prices this year by pumping more. These are Russian supplies. almost a fifth down 2021 at the previous levels of the current pandemic.
“[The supply tightness in Europe] it is an artificially created problem “.
Gazprom, which has a monopoly on Russian gas exports, on Tuesday denied wanting to reserve additional volumes in a tight monthly auction designed to increase exports to Europe across Ukraine, prompting further price increases.
Gazprom, which has fulfilled long-term contracts in Europe, declined to comment, but said it was normal to “optimize” gas flows and satisfy customer demands last week. If they have company executives previously indicated more gas will be available after the launch of Nord Stream 2.
If lower Russian supplies are not the only reason for the rise in gas prices, with longer storage in winter and stronger demand worldwide, executives and traders have questioned Gazprom’s stagnation in increasing exports.
James Huckstepp, at S&P Global Platts, said Gazprom risks risking hurting its desire to be considered a reliable partner, mainly because other pipelines in Russia will have to be shut down for maintenance next month.
“Gazprom does not stop booking uninterrupted content in Ukraine as long as the northern delivery routes are maintained… It could jeopardize its claim to be the most reliable supplier in Europe,” Huckstepp said.
An EU official said the commission did not “show any specific behavior by one of our suppliers to raise prices”.
“The current situation is a reflection of the global dynamics of the market. All EU regions now have access to more than one source of gas, so they are less vulnerable to tight supplies from each supplier, ”the official said.
Nord Stream 2 crosses the Baltic Sea to Germany and will be approved this year, although the German elections in September have made it difficult to end the session.
The U.S. has punished the pipeline, which is nearing completion. Countries like Poland also oppose it, believing that it will give Russia additional energy leverage to Russia, while allowing Ukraine to weaken while allowing Moscow to avoid the country.
Polish Foreign Minister Zbigniew Rau struck on Wednesday when Germany sided with the pipeline and wrote in the Frankfurter Allgemeine Zeitung that “the end of Nord Steam 2 will create a major security deficit on NATO’s eastern wing and Ukraine in pure security.”
Russia has long been looking for alternative means of transport to Ukraine. In 2014, Moscow annexed Crimea, the Black Sea peninsula, and continued to support representative war on eastern Ukrainian territory.
Some analysts have said that switching to suspended contracts could affect the supply situation. Theoretically, such contracts would allow Ukraine to outsource Gazprom supplies for the benefit of other customers.
“[That] this means that Gazprom will not guarantee the delivery of gas that it would commit to European buyers, ”said Laurent Ruseckas, an analyst at IHS Markit.
But Makogon said suspended contracts have been agreed with Gazprom and the Ukrainian TSO is happy to discuss firm contracts if Russia wanted it. “If Gazprom officially approached us and asked,‘ Let’s do it firmly ’, we would certainly consider this and define how to solve this problem,” Makogon said.
Makogon said Russia will finally threaten the supply crisis in Europe this winter, as storage facilities are usually refilled in the summer when heating demand is lower.
“Europe can get into very serious problems in the winter,” Makogon said. “What if Gazprom demands more pumping in August? We would just be happy. ”
Additional report by Mehreen Khan in Brussels
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