it never happened like this
Electricity tariffs in the leading economies of the European Union have reached historic highs due to the reduction in gas supplies from Russia. reported British newspaper Financial Times. The MWh cost in Germany reached €325 and in France €366.
Ordinary citizens of European countries do not add to the calm and widespread strike of gas workers that began in Norway. Due to the actions of the local trade union organization Lederne, the crisis situation is 25% in daily gas production, 15% in oil, author Reuters.
The strike is led by employees of the Norwegian state energy company Equinor. Work on three offshore oil and gas fields in the North Sea will be suspended. On July 6, workers from three more fields will join them. Thus, the fuel supply to Europe may decrease significantly in the coming months.
In this context, gas stock prices in Europe continued to rise yesterday.
On the eve of July 4, the cost of August futures at the TTF headquarters in the Netherlands rose to $1,804.3 per thousand cubic meters, or 167.3 Euros per MWh. And at the time of trading on the morning of July 5, by 12:00 Moscow time, the cost of fuel reached $ 1,844.6, and by 14:42 it fell to $ 1,781 per thousand cubic meters.
What will the tariffs be until the end of summer?
In recent years Norway has taken second place in the list of main gas suppliers in Europe, pumping up to 100 billion cubic meters of gas per year. Therefore, a quarter reduction in gas production will hit the prices of electricity tariffs for ordinary EU citizens more than the planned repairs of Nord Stream 1 (SP-1), stressed Deputy Head of the Economics Department of the Institute energy and finance Sergey in a meeting with socialbites.ca Kondratiev.
“Exports from Norway to the EU in 2022 amounted to 87.9 billion cubic meters, and 8.7 billion in April 2022. A quarter decrease means a decrease of 70-75 million cubic meters per day in pumping. Another growth factor is the temperature in European countries. Increasing demand for air conditioning may result in gas extraction from underground storage facilities.
“If abnormal temperatures continue in July and August, tariffs could rise to 350-400 Euros per MWh by the end of summer,” he said.
Which countries will be affected
Due to the sharp increase in electricity tariffs, Eastern and Southern European countries will suffer more than others. Kondratiev noted that Western European countries may also face some problems due to the decrease in gas supplies from Norway and Russia.
“Poland, the Baltic states, Spain, Italy and southern France will be under attack. The latter regions are critically dependent on gas supplies from Algeria, which is currently unwilling to increase pumping to Europe. Additional costs for air conditioning alone will cost EU countries 8-10 billion Euros.
Poland and the Baltic states have recently ostentatiously abandoned cheaper Russian gas in favor of spot deliveries of expensive LNG. In the short term, these countries cannot do without government regulation of tariffs,” he said.
However, he added that it would be extremely difficult for Germany and the Netherlands to limit the increase in electricity tariffs. Berlin is currently facing multiple reductions in Russian gas supplies, while a reduction in Norwegian fuel supply will present even greater challenges.
“Germany was definitely not ready for such a scenario. The same Uniper stated that the daily discount on different days in contracts with Gazprom is up to 25% of the daily rate. But Norway added difficulties to Germany with its gas strike. Without Russian gas, Germany will be extremely difficult to prepare for the autumn-winter heating season, ”Kondratyev concluded.
what are the alternatives
Only an increase in fuel supply via Blue Stream can offset the negative impact of the suspension of gas pumping via SP-1 from July 11 to July 21. Kondratyev suggested that another option could be direct agreements between Gazprom and Turkey’s Botas to increase the pumping of clearing gas to Southern Europe via Greece.
All North-Western and Central Europe, including Germany, the Netherlands, the Czech Republic and Austria, was blocked after the actions of the Polish authorities. Warsaw imposed direct sanctions on Gazprom, which stopped pumping through the Yamal-Europe pipeline. Beltransgaz is also under Polish sanctions.
Now the only option to compensate for the shutdown of SP-1 is to increase pumping to Southern Europe via Blue Stream to 15-20 million cubic meters per day, but on an EU scale these are still insignificant volumes,” he said.
He added that the technical capacity of the Blue Stream gas pipeline will not allow a sharp increase in fuel pumping to the EU. As for the Ukraine route, the obstacle here will be Kiev’s reluctance to compromise with Gazprom.
“Over the past month, the monopolist continues to apply for pumping fuel from the Sokhranivka station. These offers are rejected by the Ukrainian side. For this reason, Europe loses 34 million cubic meters every day. Annually, these 10 billion fuels are comparable to all Azerbaijan’s exports to the EU. Under the contract, it is possible to increase the pumping from the existing 40-45 million cubic meters in Sudzha to 77 million. But European partners are not yet demanding an increase in pumping along this route, ”concluded Kondratiev.
Source: Gazeta
Barbara Dickson is a seasoned writer for “Social Bites”. She keeps readers informed on the latest news and trends, providing in-depth coverage and analysis on a variety of topics.