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2022–2023 Russia–European Union gas dispute

The Russia–EU gas dispute flared up in March 2022 following the invasion of Ukraine in late February. Russia and the major EU countries clashed over the issue of payment for pipeline natural gas exported to Europe by Russia's Gazprom. In June, Russia cut the flow of gas to Germany by more than half, and in September of that year it stopped it altogether. On 26 September 2022, the Nord Stream 1 and 2 gas pipelines both ruptured with evidence of sabotage. As of August 2023, Russian pipeline gas exports continued to flow via Ukraine to Slovakia, Austria, and Italy, as well as to non-EU Moldova; via the Turk Stream pipeline, Russian gas continued to flow to Greece, Hungary, and Croatia, as well as a number of non-EU countries in Europe, while Europe imported record volumes of liquefied natural gas from Russia in 2022, with Spain being one of the key importers of Russian LNG.[5]

  Europe TTF natural gas
Nord Stream gas flows[1]
Russia cut the flow of natural gas by more than half in June because it said it could not get a part seized by the Canadian government because of sanctions.[2]
Russia halted gas flows on 11 July for annual maintenance for 10 days and resumed flows on 21 July.[3]
Russia stopped gas flows on 2 September for maintenance for three days, but has failed to resume flows since then.[4]

Background edit

 
Major natural gas pipelines from Russia to Europe
 
Sources of European natural gas, 2010–2017. Russia (dark brown) was the source of 35% of total EU natural gas consumption in 2017.

Europe consumed 512 billion cubic metres (bcm) of natural gas in 2020, of which 185 bcm (36%) came from Russia.[6] In early 2022, Russia supplied 45% of EU's natural gas imports, earning $900 million a day,[7] and by October 2022, it had decreased to 7.5%.[8]

Following Russia's invasion of Ukraine in February 2022, the United States, the European Union,[9] and other countries,[10] introduced or significantly expanded sanctions to cut off "selected Russian banks" from SWIFT.[11] Assets of the Central Bank of Russia held in Western nations were frozen: the Central Bank of Russia was blocked from accessing more than $400 billion in foreign-exchange reserves held abroad.[12][13] Accounts in Western banks owned by Gazprom were also frozen. Any money deposited into these frozen Gazprom accounts including payments for natural gas were also frozen.[citation needed]

The Biden administration had initially allowed Russia to continue to repurpose its funds in U.S. financial institutions to make due payments on Russia's sovereign debt. But on 4 April 2022, the U.S. Department of the Treasury banned Russia from withdrawing funds held in U.S. banks to pay off its debt obligations.[14]

Russia, which in early 2022 held $630 billion in foreign-exchange reserves,[15] was consequently unable to make payments on its debt in US dollars or Euros as it was contractually required to do. Two dollar denominated bonds issued by Russian government matured on 4 April 2022.[16] On 5 April, Russia attempted to pay its bond holders with dollars from $600M of reserves held in U.S. banks, but these were blocked by the U.S. government as part of the international sanctions during the Russo-Ukrainian War.[17] In April 2022 Russia defaulted on its foreign debt by failing to pay its obligations in U.S. dollars. The credit agency S&P Global stated that Russia was in "selective default" because it tried to pay obligations on dollar denominated debt in rubles, which could not be converted into "dollars equivalent to the originally due amounts".[16][18][19]

In March 2022, the European Commission and International Energy Agency presented joint plans to reduce reliance on Russian energy, reduce Russian gas imports by two thirds within a year, and completely by 2030.[20][21] In April 2022, European Commission President Ursula von der Leyen said "the era of Russian fossil fuels in Europe will come to an end".[22] On 18 May 2022, the European Union published plans to end its reliance on Russian oil, natural gas and coal by 2027.[23]

Demand of payment in rubles, March 2022 edit

 
EUR/Ruble exchange rate

On 23 March 2022, Russian President Vladimir Putin announced payments for Russian pipeline gas would be switched from "the currencies that had been compromised" (US dollar and euro) to payments in roubles vis-à-vis the previously formally designated "unfriendly countries", including all European Union states; on 28 March, he ordered the Central Bank of Russia, the government, and Gazprom to present proposals by 31 March for gas payments in rubles from "unfriendly countries".[24][25][26] President Putin's move was construed to be aimed at forcing European companies to directly prop up the Russian currency as well as bringing Russia's Central Bank back into the global financial system after the sanctions had nearly cut it off from financial markets.[27] ING bank's chief economist, Carsten Brzeski, told Deutsche Welle he thought the gas-for-ruble demand was "a smart move".[27] At the end of April 2022, Russian Foreign Minister Sergey Lavrov said that the $300 billion of Gazprom's funds that had in effect been "stolen" by the "Western 'friends'" were actually the funds they had paid for Russia's gas, which meant that all those years they had been consuming the Russian gas free of charge; he thus made a point that the new payment system was designed to preclude "the continuation of the brazen thievery those countries were involved in".[28]

On 28 March, Germany's Economy Minister Robert Habeck announced that the Group of Seven countries had rejected Russian President's demand that payment for gas be made in rubles.[29] On the same day, Russian president's spokesman, Dmitry Peskov, said that Russia would "not supply gas for free".[30]

On 29 March, it was reported that the physical gas flows through the Yamal-Europe pipeline at Germany's Mallnow point had decreased to zero.[31] The following day, Germany's Economy and Climate Minister Robert Habeck triggered the "early warning" level for gas supplies, the first step of a national gas emergency plan that involved setting up a crisis team of representatives from the federal and state governments, regulators and private industry and that could, eventually, lead to gas rationing; he urged Germans to voluntarily cut their energy consumption as a way of ending the country's dependence on Russia.[32][33] A similar step was undertaken by the Austrian government.[34] Meanwhile, Gazprom said it continued to supply gas to Europe via Ukraine. Russia's gas had also begun flowing westward through the pipeline via Poland.[33] Russia's TASS reported that President Putin had a phone call with Germany's Chancellor Olaf Scholz to "inform him on the decision to switch to payments in rubles for gas".[35] According to Olaf Scholz's office, President Vladimir Putin told the German Chancellor that European companies could continue paying in euros or dollars.[36]

Decree 172 edit

On 31 March, President Vladimir Putin signed a decreedecree 172 − that obligated, starting 1 April, purchasers of Russian pipeline gas from countries on Russia's Unfriendly Countries List[37] to make their payments for Russian gas through a facility run by Russia's Gazprombank, a subsidiary of Gazprom.[38][39][40] To pay for gas, purchaser companies from "unfriendly countries" would be required to open two accounts at Gazprombank and transfer foreign currency in which they previously made payments into one of them,[41][38] which Gazprombank would then sell on the Moscow stock exchange for rubles that are deposited into the second (foreign-purchaser owned) ruble-denominated account[42] (this currency conversion would be done in Russia).[39][38] Gazprombank would then transfer this ruble payment to Gazprom PJSC (a company that operates gas pipeline systems, produces and explores gas, and transports high pressure gas in the Russian Federation and European countries[43]), at which point the purchaser would be deemed to have legally fulfilled (under Russian law) its obligations to pay.[37] Gas purchasers were thus still able to make payments by transferring foreign (non-ruble) currencies, including the currencies stipulated by their contract,[39] which in most cases were US dollars and Euros. Despite this, the obligatory new payment mechanism introduced by decree 172 has been colloquially referred to as a "demand to pay in rubles" by many media outlets.[38]

The natural gas contracts stipulated the currency in which payments to Gazprom were to be made[38] − 97% of which were in US dollars or euros[41] − as well as the accounts into which the payments were to be deposited, which were Gazprom-owned accounts at Western financial institutions. These accounts had been frozen by Western sanctions and any payments deposited into these accounts would also be immediately frozen, whereas payments deposited into these Gazprombank accounts (located in Russia) would be accessible to Gazprom, which would circumvent these Western sanctions.[41][44]

The first post-1 April payments were due near the end of April and in May.[39] Putin stated that any country refusing to use the new payment mechanism would be in violation of their contracts and face "corresponding repercussions".[38] The Russian government would consider a failure to pay to be a default and the existing contract would be terminated. The decree allowed exceptions to be made for buyers that would permit them to pay as before.

On 29 April 2022, Germany's Economy Ministry clarified that European energy companies won't be in breach sanctions if they comply with decree 172, saying in an emailed statement that "According to these guidelines, account K, to which payment is made in euros/dollars, is in line with the sanctions if companies declare that contracts have been fulfilled with payment in euros or dollars."[45]

Gas delivery disruption, April 2022 – present edit

On 26 April 2022, Gazprom announced it would stop delivering natural gas to Poland via the Yamal–Europe pipeline and to Bulgaria from the following day as both countries had failed to make due payments to Gazprom in rubles.[46][47] Poland said it did not expect to experience disruptions due to its natural gas storage facilities being about 75% full (ensuring 40–180 days of supply), the Poland–Lithuania gas pipeline becoming operational in May 2022, and the Baltic Pipe natural gas pipeline between Poland and Norway becoming operational in October 2022, which would make Poland fully independent of Russian gas.[46][47] Poland could also import gas via the Świnoujście LNG terminal in the city of Świnoujście in the country's extreme north-west. Meanwhile, Bulgaria was almost completely dependent on Russian gas.[47]

The following day, Gazprom announced that it had "completely suspended gas supplies" to Poland's PGNiG and Bulgaria's Bulgargaz "due to absence of payments in roubles".[48] Bulgaria, Poland, and the European Union condemned the suspension.[49] The announcement of the suspension caused natural gas prices to surge[39] and the Russian ruble to reach a 2 year high against the Euro in Moscow trade.[50]

On 11 May 2022, Ukraine's state-owned gas grid operator GTSOU halted the flow of natural gas through the Sokhranovka transit point, which had transported about one third of all of piped Russian natural gas that transited through Ukraine.[51] It was the first time since the start of Russia's 24 February invasion of Ukraine that natural gas flow through Ukraine was interrupted.[51] The Ukrainian government stated that it would not reopen this pipeline unless it regained control of areas from pro-Russian fighters.[52] On the same day, Russia imposed sanctions on European subsidiaries of Gazprom which had been nationalized by European countries.[53]

On 20 May 2022, Gazprom announced that it had informed Finland that the next morning, natural gas deliveries to the country would be halted due to the refusal of the Finnish state-owned gas wholesaler to pay in rubles (that is, to comply with decree 172).[54] Natural gas accounted for 5% of Finland's total annual energy consumption, with the majority of this natural gas being supplied by Russia.[54]

On 14 June 2022, Gazprom announced it would be slashing gas flow via the Nord Stream 1 pipeline, due to what it claimed was Siemens’ failure to return compressor units on time that had been sent off to Canada for repair. The explanation was challenged by Germany's energy regulator.[55][56]

On 16 June 2022, European benchmark natural gas prices increased by around 30% after Gazprom reduced Nord Stream 1's gas supply to Germany to 40% of the pipeline's capacity. Russia warned that usage of the pipeline could be completely suspended because of problems with the repairment.[57]

On 11 July 2022, Nord Stream I was turned off for scheduled annual maintenance, but remained off after the usual repair period.[58] The Siemens pipeline turbine was repaired in Canada. Due to sanctions, Canada could not deliver the turbine back to Russia after repair works and instead sent it to Germany, despite the call of Volodymyr Zelenskiy to maintain the sanctions.[59]

On 26 September 2022, the Nord Stream 1 and 2 gas pipelines, which connect Russia and Germany, both ruptured in the Baltic Sea. Nord Stream 1 had been operating at a significantly reduced capacity and then closed for weeks, and Nord Stream 2 was not operating, but both still contained gas.[60] As of 7 October 2022, Swedish investigators said evidence pointed to sabotage.[61][62]

Analysis edit

With European policy-makers deciding in March 2022 to replace Russian fossil fuel imports with other fossil fuels imports and European coal energy production,[63][64] as well as due to Russia being "a key supplier" of materials used for "clean energy technologies", the reactions to the war were projected in March 2022 to have an overall negative impact on the climate emissions pathway.[65]

However a July 2022 report from three Germany science academies noted that if Russian natural gas imports were to cease in the next few months, around 25% of Europe's natural gas demand could not be met at peak times for a winter similar to that in 2021 — moreover that shortfall is due to a lack of transport infrastructure such as pipeline capacity and LNG terminals and that this supply gap can be closed by 2025 if natural gas consumption falls by 20% across Europe and infrastructure is expanded simultaneously.[66]

A fully open study from Zero Lab, Princeton University published in July 2022 and based on the GenX framework concluded that reliance on Russia gas could end by October 2022 under the three core scenarios they investigated — which ranged from high coal usage to accelerated renewables deployment.[67][68] All three cases would result in falling greenhouse gas emissions, relative to business as usual.[67]: 7 

In 2022, Turkish President Recep Tayyip Erdoğan and Russian President Vladimir Putin planned for Turkey to become an energy hub for all of Europe.[69] According to Aura Săbăduș, a senior energy journalist focusing on the Black Sea region, "Turkey would accumulate gas from various producers — Russia, Iran and Azerbaijan, [liquefied natural gas] and its own Black Sea gas — and then whitewash it and relabel it as Turkish. European buyers wouldn’t know the origin of the gas."[70]

Alternate supplies edit

In May 2022 small natural gas exporter Peru increased its export of liquified natural gas to Europe, especially to Spain and the United Kingdom[71] in the first five months of 2022, by 74% compared to the same period in 2021.[71] As of September 2022, Norway, the second largest non-EU provider of gas to the EU after Russia for several decades, has been constrained by its pipeline network's structural (maximum) capacities. Prior to the opening of the Baltic Pipe, which became partially operational on 26 September 2022, Norway could only increase the volume of deliveries of natural gas to try to compensate Russia's disrupted supplies by a maximum of 5 bcm to Europe, a far cry from Russia's supplies of 155 bcm of natural gas to the EU in 2021.[72]

On 20 May 2022, Germany and Qatar signed a declaration to deepen their energy partnership. Qatar plans to start supplying LNG to Germany in 2024.[73]

The total and operational capacity of global LNG tanker fleet as of 2021 of about 103 billion cubic meters was already operating at full capacity before the 2022 gas disputes. The UK and EU consume about 550 billion cubic meters of gas per year. Although the UK has 3 LNG terminals for gasification much of the EU has insufficient tankers to meet its needs.[clarification needed] In late 2022, the high price attracted more tankers than available LNG import capacity.[74]

On 15 June 2022, Israel, Egypt and the European Union signed a trilateral natural gas agreement.[75]

On 20 June 2022, Dutch climate and energy minister Rob Jetten announced that the Netherlands would remove all restrictions on the operation of coal-fired power stations until at least 2024 in response to Russia's refusal to export natural gas to the country. Operations were previously limited to less than a third of the total production.[76]

By 2023, EU had an LNG import capacity of 157 BCM/year,[77] but had not been fully utilized in 2022.[78] Some terminals were fully booked for 2023,[79][80] while others had open time slots for further import.[81][82]

European gas prices went above €200/MWh in 2022. By August 2023, price had dropped to around €30, and with EU gas storage near full,[83] some companies began storing gas in war-torn Ukraine.[84]

Sanctions edit

The European Energy ministers agreed, on 19 December 2022, on a price cap for natural gas at €180 per megawatt-hour.[85]

The objective being to stabilise and avoid major upward fluctuations in gas prices.

See also edit

References edit

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2022, 2023, russia, european, union, dispute, russia, dispute, flared, march, 2022, following, invasion, ukraine, late, february, russia, major, countries, clashed, over, issue, payment, pipeline, natural, exported, europe, russia, gazprom, june, russia, flow,. The Russia EU gas dispute flared up in March 2022 following the invasion of Ukraine in late February Russia and the major EU countries clashed over the issue of payment for pipeline natural gas exported to Europe by Russia s Gazprom In June Russia cut the flow of gas to Germany by more than half and in September of that year it stopped it altogether On 26 September 2022 the Nord Stream 1 and 2 gas pipelines both ruptured with evidence of sabotage As of August 2023 Russian pipeline gas exports continued to flow via Ukraine to Slovakia Austria and Italy as well as to non EU Moldova via the Turk Stream pipeline Russian gas continued to flow to Greece Hungary and Croatia as well as a number of non EU countries in Europe while Europe imported record volumes of liquefied natural gas from Russia in 2022 with Spain being one of the key importers of Russian LNG 5 Europe TTF natural gasNord Stream gas flows 1 Russia cut the flow of natural gas by more than half in June because it said it could not get a part seized by the Canadian government because of sanctions 2 Russia halted gas flows on 11 July for annual maintenance for 10 days and resumed flows on 21 July 3 Russia stopped gas flows on 2 September for maintenance for three days but has failed to resume flows since then 4 Contents 1 Background 2 Demand of payment in rubles March 2022 2 1 Decree 172 3 Gas delivery disruption April 2022 present 4 Analysis 5 Alternate supplies 6 Sanctions 7 See also 8 ReferencesBackground editMain article Russia in the European energy sector Further information International sanctions during the 2022 Russian invasion of Ukraine 2022 Russian debt default and SWIFT ban against Russian banks See also Nord Stream Nord Stream 2 South Stream and TurkStream nbsp Major natural gas pipelines from Russia to Europe nbsp Sources of European natural gas 2010 2017 Russia dark brown was the source of 35 of total EU natural gas consumption in 2017 Europe consumed 512 billion cubic metres bcm of natural gas in 2020 of which 185 bcm 36 came from Russia 6 In early 2022 Russia supplied 45 of EU s natural gas imports earning 900 million a day 7 and by October 2022 it had decreased to 7 5 8 Following Russia s invasion of Ukraine in February 2022 the United States the European Union 9 and other countries 10 introduced or significantly expanded sanctions to cut off selected Russian banks from SWIFT 11 Assets of the Central Bank of Russia held in Western nations were frozen the Central Bank of Russia was blocked from accessing more than 400 billion in foreign exchange reserves held abroad 12 13 Accounts in Western banks owned by Gazprom were also frozen Any money deposited into these frozen Gazprom accounts including payments for natural gas were also frozen citation needed The Biden administration had initially allowed Russia to continue to repurpose its funds in U S financial institutions to make due payments on Russia s sovereign debt But on 4 April 2022 the U S Department of the Treasury banned Russia from withdrawing funds held in U S banks to pay off its debt obligations 14 Russia which in early 2022 held 630 billion in foreign exchange reserves 15 was consequently unable to make payments on its debt in US dollars or Euros as it was contractually required to do Two dollar denominated bonds issued by Russian government matured on 4 April 2022 16 On 5 April Russia attempted to pay its bond holders with dollars from 600M of reserves held in U S banks but these were blocked by the U S government as part of the international sanctions during the Russo Ukrainian War 17 In April 2022 Russia defaulted on its foreign debt by failing to pay its obligations in U S dollars The credit agency S amp P Global stated that Russia was in selective default because it tried to pay obligations on dollar denominated debt in rubles which could not be converted into dollars equivalent to the originally due amounts 16 18 19 In March 2022 the European Commission and International Energy Agency presented joint plans to reduce reliance on Russian energy reduce Russian gas imports by two thirds within a year and completely by 2030 20 21 In April 2022 European Commission President Ursula von der Leyen said the era of Russian fossil fuels in Europe will come to an end 22 On 18 May 2022 the European Union published plans to end its reliance on Russian oil natural gas and coal by 2027 23 Demand of payment in rubles March 2022 edit nbsp EUR Ruble exchange rateOn 23 March 2022 Russian President Vladimir Putin announced payments for Russian pipeline gas would be switched from the currencies that had been compromised US dollar and euro to payments in roubles vis a vis the previously formally designated unfriendly countries including all European Union states on 28 March he ordered the Central Bank of Russia the government and Gazprom to present proposals by 31 March for gas payments in rubles from unfriendly countries 24 25 26 President Putin s move was construed to be aimed at forcing European companies to directly prop up the Russian currency as well as bringing Russia s Central Bank back into the global financial system after the sanctions had nearly cut it off from financial markets 27 ING bank s chief economist Carsten Brzeski told Deutsche Welle he thought the gas for ruble demand was a smart move 27 At the end of April 2022 Russian Foreign Minister Sergey Lavrov said that the 300 billion of Gazprom s funds that had in effect been stolen by the Western friends were actually the funds they had paid for Russia s gas which meant that all those years they had been consuming the Russian gas free of charge he thus made a point that the new payment system was designed to preclude the continuation of the brazen thievery those countries were involved in 28 On 28 March Germany s Economy Minister Robert Habeck announced that the Group of Seven countries had rejected Russian President s demand that payment for gas be made in rubles 29 On the same day Russian president s spokesman Dmitry Peskov said that Russia would not supply gas for free 30 On 29 March it was reported that the physical gas flows through the Yamal Europe pipeline at Germany s Mallnow point had decreased to zero 31 The following day Germany s Economy and Climate Minister Robert Habeck triggered the early warning level for gas supplies the first step of a national gas emergency plan that involved setting up a crisis team of representatives from the federal and state governments regulators and private industry and that could eventually lead to gas rationing he urged Germans to voluntarily cut their energy consumption as a way of ending the country s dependence on Russia 32 33 A similar step was undertaken by the Austrian government 34 Meanwhile Gazprom said it continued to supply gas to Europe via Ukraine Russia s gas had also begun flowing westward through the pipeline via Poland 33 Russia s TASS reported that President Putin had a phone call with Germany s Chancellor Olaf Scholz to inform him on the decision to switch to payments in rubles for gas 35 According to Olaf Scholz s office President Vladimir Putin told the German Chancellor that European companies could continue paying in euros or dollars 36 Decree 172 edit On 31 March President Vladimir Putin signed a decree decree 172 that obligated starting 1 April purchasers of Russian pipeline gas from countries on Russia s Unfriendly Countries List 37 to make their payments for Russian gas through a facility run by Russia s Gazprombank a subsidiary of Gazprom 38 39 40 To pay for gas purchaser companies from unfriendly countries would be required to open two accounts at Gazprombank and transfer foreign currency in which they previously made payments into one of them 41 38 which Gazprombank would then sell on the Moscow stock exchange for rubles that are deposited into the second foreign purchaser owned ruble denominated account 42 this currency conversion would be done in Russia 39 38 Gazprombank would then transfer this ruble payment to Gazprom PJSC a company that operates gas pipeline systems produces and explores gas and transports high pressure gas in the Russian Federation and European countries 43 at which point the purchaser would be deemed to have legally fulfilled under Russian law its obligations to pay 37 Gas purchasers were thus still able to make payments by transferring foreign non ruble currencies including the currencies stipulated by their contract 39 which in most cases were US dollars and Euros Despite this the obligatory new payment mechanism introduced by decree 172 has been colloquially referred to as a demand to pay in rubles by many media outlets 38 The natural gas contracts stipulated the currency in which payments to Gazprom were to be made 38 97 of which were in US dollars or euros 41 as well as the accounts into which the payments were to be deposited which were Gazprom owned accounts at Western financial institutions These accounts had been frozen by Western sanctions and any payments deposited into these accounts would also be immediately frozen whereas payments deposited into these Gazprombank accounts located in Russia would be accessible to Gazprom which would circumvent these Western sanctions 41 44 The first post 1 April payments were due near the end of April and in May 39 Putin stated that any country refusing to use the new payment mechanism would be in violation of their contracts and face corresponding repercussions 38 The Russian government would consider a failure to pay to be a default and the existing contract would be terminated The decree allowed exceptions to be made for buyers that would permit them to pay as before On 29 April 2022 Germany s Economy Ministry clarified that European energy companies won t be in breach sanctions if they comply with decree 172 saying in an emailed statement that According to these guidelines account K to which payment is made in euros dollars is in line with the sanctions if companies declare that contracts have been fulfilled with payment in euros or dollars 45 Gas delivery disruption April 2022 present editOn 26 April 2022 Gazprom announced it would stop delivering natural gas to Poland via the Yamal Europe pipeline and to Bulgaria from the following day as both countries had failed to make due payments to Gazprom in rubles 46 47 Poland said it did not expect to experience disruptions due to its natural gas storage facilities being about 75 full ensuring 40 180 days of supply the Poland Lithuania gas pipeline becoming operational in May 2022 and the Baltic Pipe natural gas pipeline between Poland and Norway becoming operational in October 2022 which would make Poland fully independent of Russian gas 46 47 Poland could also import gas via the Swinoujscie LNG terminal in the city of Swinoujscie in the country s extreme north west Meanwhile Bulgaria was almost completely dependent on Russian gas 47 The following day Gazprom announced that it had completely suspended gas supplies to Poland s PGNiG and Bulgaria s Bulgargaz due to absence of payments in roubles 48 Bulgaria Poland and the European Union condemned the suspension 49 The announcement of the suspension caused natural gas prices to surge 39 and the Russian ruble to reach a 2 year high against the Euro in Moscow trade 50 On 11 May 2022 Ukraine s state owned gas grid operator GTSOU halted the flow of natural gas through the Sokhranovka transit point which had transported about one third of all of piped Russian natural gas that transited through Ukraine 51 It was the first time since the start of Russia s 24 February invasion of Ukraine that natural gas flow through Ukraine was interrupted 51 The Ukrainian government stated that it would not reopen this pipeline unless it regained control of areas from pro Russian fighters 52 On the same day Russia imposed sanctions on European subsidiaries of Gazprom which had been nationalized by European countries 53 On 20 May 2022 Gazprom announced that it had informed Finland that the next morning natural gas deliveries to the country would be halted due to the refusal of the Finnish state owned gas wholesaler to pay in rubles that is to comply with decree 172 54 Natural gas accounted for 5 of Finland s total annual energy consumption with the majority of this natural gas being supplied by Russia 54 On 14 June 2022 Gazprom announced it would be slashing gas flow via the Nord Stream 1 pipeline due to what it claimed was Siemens failure to return compressor units on time that had been sent off to Canada for repair The explanation was challenged by Germany s energy regulator 55 56 On 16 June 2022 European benchmark natural gas prices increased by around 30 after Gazprom reduced Nord Stream 1 s gas supply to Germany to 40 of the pipeline s capacity Russia warned that usage of the pipeline could be completely suspended because of problems with the repairment 57 On 11 July 2022 Nord Stream I was turned off for scheduled annual maintenance but remained off after the usual repair period 58 The Siemens pipeline turbine was repaired in Canada Due to sanctions Canada could not deliver the turbine back to Russia after repair works and instead sent it to Germany despite the call of Volodymyr Zelenskiy to maintain the sanctions 59 On 26 September 2022 the Nord Stream 1 and 2 gas pipelines which connect Russia and Germany both ruptured in the Baltic Sea Nord Stream 1 had been operating at a significantly reduced capacity and then closed for weeks and Nord Stream 2 was not operating but both still contained gas 60 As of 7 October 2022 Swedish investigators said evidence pointed to sabotage 61 62 Analysis editWith European policy makers deciding in March 2022 to replace Russian fossil fuel imports with other fossil fuels imports and European coal energy production 63 64 as well as due to Russia being a key supplier of materials used for clean energy technologies the reactions to the war were projected in March 2022 to have an overall negative impact on the climate emissions pathway 65 However a July 2022 report from three Germany science academies noted that if Russian natural gas imports were to cease in the next few months around 25 of Europe s natural gas demand could not be met at peak times for a winter similar to that in 2021 moreover that shortfall is due to a lack of transport infrastructure such as pipeline capacity and LNG terminals and that this supply gap can be closed by 2025 if natural gas consumption falls by 20 across Europe and infrastructure is expanded simultaneously 66 A fully open study from Zero Lab Princeton University published in July 2022 and based on the GenX framework concluded that reliance on Russia gas could end by October 2022 under the three core scenarios they investigated which ranged from high coal usage to accelerated renewables deployment 67 68 All three cases would result in falling greenhouse gas emissions relative to business as usual 67 7 In 2022 Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin planned for Turkey to become an energy hub for all of Europe 69 According to Aura Săbăduș a senior energy journalist focusing on the Black Sea region Turkey would accumulate gas from various producers Russia Iran and Azerbaijan liquefied natural gas and its own Black Sea gas and then whitewash it and relabel it as Turkish European buyers wouldn t know the origin of the gas 70 Alternate supplies editIn May 2022 small natural gas exporter Peru increased its export of liquified natural gas to Europe especially to Spain and the United Kingdom 71 in the first five months of 2022 by 74 compared to the same period in 2021 71 As of September 2022 Norway the second largest non EU provider of gas to the EU after Russia for several decades has been constrained by its pipeline network s structural maximum capacities Prior to the opening of the Baltic Pipe which became partially operational on 26 September 2022 Norway could only increase the volume of deliveries of natural gas to try to compensate Russia s disrupted supplies by a maximum of 5 bcm to Europe a far cry from Russia s supplies of 155 bcm of natural gas to the EU in 2021 72 On 20 May 2022 Germany and Qatar signed a declaration to deepen their energy partnership Qatar plans to start supplying LNG to Germany in 2024 73 The total and operational capacity of global LNG tanker fleet as of 2021 of about 103 billion cubic meters was already operating at full capacity before the 2022 gas disputes The UK and EU consume about 550 billion cubic meters of gas per year Although the UK has 3 LNG terminals for gasification much of the EU has insufficient tankers to meet its needs clarification needed In late 2022 the high price attracted more tankers than available LNG import capacity 74 On 15 June 2022 Israel Egypt and the European Union signed a trilateral natural gas agreement 75 On 20 June 2022 Dutch climate and energy minister Rob Jetten announced that the Netherlands would remove all restrictions on the operation of coal fired power stations until at least 2024 in response to Russia s refusal to export natural gas to the country Operations were previously limited to less than a third of the total production 76 By 2023 EU had an LNG import capacity of 157 BCM year 77 but had not been fully utilized in 2022 78 Some terminals were fully booked for 2023 79 80 while others had open time slots for further import 81 82 European gas prices went above 200 MWh in 2022 By August 2023 price had dropped to around 30 and with EU gas storage near full 83 some companies began storing gas in war torn Ukraine 84 Sanctions editThe European Energy ministers agreed on 19 December 2022 on a price cap for natural gas at 180 per megawatt hour 85 The objective being to stabilise and avoid major upward fluctuations in gas prices See also edit2021 2023 global energy crisis Worldwide crisis affected by shortage of energy supplies Economic impact of the 2022 Russian invasion 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landing page You may need to sort through the file listings to locate the appropriate PDF nbsp Erdogan Agrees to Putin s Plan for Turkey to Be Russian Gas Hub VOA News 20 October 2022 Erdogan plays energy card in Turkish election with Putin s help Politico 4 May 2023 a b Aquino Marco Parraga Marianna 2022 05 31 In Latam Peru streaks ahead in LNG race to Europe as Trinidad stumbles Reuters Archived from the original on 2022 06 06 Retrieved 2022 06 06 Lambert Laurent Tayah Jad Lee Schmidt Caroline Abdalla Monged September 2022 The EU s natural gas Cold War and diversification challenges Energy Strategy Reviews 43 100934 doi 10 1016 j esr 2022 100934 S2CID 251715432 Germany signs energy partnership with Qatar Deutsche Welle 20 May 2022 Archived from the original on 26 June 2022 Retrieved 26 June 2022 Dozens of LNG laden ships queue off Europe s coasts unable to unload www euractiv com 18 October 2022 EU signs gas deal with Israel Egypt in bid to ditch Russia Al Jazeera 15 June 2022 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Russia European Union gas dispute amp oldid 1177885177, wikipedia, wiki, book, books, library,

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