Nord Stream latest
With the main gas pipelines from Russia into Europe being disrupted or halted, nor only have EU nations and the UK price hikes and shortages in supply, they also face diplomatic hurdles.
This week, Vladimir Putin claimed the ball is now in the European Union’s court – “let them just open the tap,” he said at the annual Russian Energy Week in Moscow. The statement came just as the UN general assembly voted to condemn the annexation of Ukraine.
Nord Stream 2 was halted because of the invasion, and Nord Stream 1 has suffered severe disruption in recent months..
At the Moscow forum, Mr Putin described the leaks as an “act of international terrorism”. But he said Russia was ready to resume supplies via the one intact part of Nord Stream 2.
Putin also said that Russia could redirect supplies intended for the damaged Nord Stream pipelines to the Black Sea to create a European gas hub in Turkey, or even use the one intact part of Nord Stream 2 to supply the EU
The cost – not just in money
While the restarting of gas supplies to Europe would be welcome in a strictly supply sense, there would of course be a diplomatic price to pay.
The issue is that European Union countries are endeavouring to stem their reliance on Russian oil and gas after Putin sent troops into Ukraine as part of what he calls a special military operation.
To kowtow back to Moscow as the winter approaches would play right into Putin’s hands, likely lengthening the war and spiking the negotiations hubs of the EU.
The Turkish connection
The proposal of a Turkish pipeline also lines up with Ankara being one of the few allies Moscow has had in recent times – with Turkey not quite supporting Russia as the UN, but along with China and India, abstaining or remaining fairly neutral.
Gazprom CEO Alexei Miller praised the Turkstream pipeline across Black Sea, noting it was much deeper than Nord Stream.
Russian position
Putin also said Russian gas could still be supplied to Europe through the one part of the Nord Stream 2 pipeline that is intact, but that would depend on the EU.
Miller said the pipelines could be repaired but that the EU had to say whether it wanted them repaired – and ensure their security. The pipelines, which have become a flashpoint in the Ukraine crisis, have been leaking gas into the Baltic Sea off the coast of Denmark and Sweden.
Europe suspects an act of sabotage that Moscow quickly sought to pin on the west, suggesting the United States stood to gain.
Putin said Russia planned to hold oil production and exports at current levels until 2025 and that Moscow would not cede its leading position in the global energy market despite sanctions.
Our take
Taking a position on Russian gas is fraught with volatility due not only to the supply issue but the external political factors of the Ukraine war.
How the EU and Moscow will proceed as winter bites is something undoubtedly to watch for, but the Turkish angle is also interesting and worth keeping tabs on, as any notion of a new gas hub could offer many opportunities for investment.
Ultimately the gas question will be worked out not by the markets as such but but statesmen and women, and hence a prolonged period of instability – not just in investment but in very real terms for households and consumers