In Europe, again talking about the introduction of the marginal price of Russian gas

On the last day of summer, Europe was left without Russian gas. As Gazprom warned, from August 31 until the morning of September 3, the last working turbine of Nord Stream-1 went for maintenance. In fact, this means a complete shutdown of the pipeline.

Although the downtime will not drag on for a long time, however, as practice shows, any interruptions in the energy supply of the continent lead to an increase in gas quotations. However, on the eve of the day the gas pipeline was shut down, prices in Europe, on the contrary, fell sharply.

Against this background, the European Union intends to further aggravate the energy confrontation with Moscow and is going to set a price ceiling for Russian gas.

Judgments about the situation in which Europe is temporarily left without Russian gas sound different. German Economics Minister Robert Habeck is optimistic, noting that the goal of filling the stockpiles of “blue fuel” by 85% will be achieved with a month ahead of schedule as early as early September. The reserves accumulated in underground storage facilities will help to avoid an acute shortage of gas with the advent of cold weather, so the Germans “may not even have to turn off residential buildings and production.”

There are those in Europe who doubt such blissful prospects for the continent. According to Shell CEO Ben van Beurden, whose company has withdrawn from a number of projects in our country in recent months, the gas crisis in European countries, associated with a reduction in supplies from Russia, may drag on for several winters. “We will have to look for some solution,” he said.

At first glance, Europe has managed to prepare for the shutdown of Russian gas: according to Gas Infrastructure Europe, the average filling of European storage facilities is one step away from the target level of 80%. And half of the EU countries even exceeded this bar.

The latest fluctuations in gas prices also inspire optimism in European consumers. If on August 26, against the background of information about the shutdown of Nord Stream-1, the cost of a thousand cubic meters on the Dutch TTF hub exceeded $3,500, now the prices of September futures have dropped to about $2,500. Such indicators, according to experts, were achieved due to two factors. After disruptions in supplies via Nord Stream 1 began this summer, the Europeans began actively pumping gas into their storage facilities at a faster pace – even despite the ultra-high summer prices for “blue fuel”. Well, their current decline is due to the fact that the abnormal heat has receded from the continent, and at the present time – until the cold comes – it needs significantly smaller fuel reserves.

However, most EU leaders are well aware that meeting storage capacity targets is no guarantee that residents will not have to freeze on New Year’s Eve. Underground storage facilities are designed to compensate for peak energy demand during the winter, when temperatures periodically drop and demand for fuel rises. In other words, UGS can only insure Europeans if they start to use extra kilowatts during the frosty months, but they are not a full-fledged gas supply for the entire heating season.

“Gas cannot simply be stored up and used for heating in winter: raw materials are constantly required not only for energy generation, but also for production. As the atmospheric temperature drops, the feedstock will be used up much faster and the UGS occupancy level will start to drop. If the previous volumes of supplies, primarily from Russia, are not restored, then the EU states will not be able to quickly compensate for the sharp increase in fuel demand through imports from other directions in winter,” warns Artem Deev, head of the analytical department at AMarkets.

It is no coincidence that at the suggestion of the Czech Republic, which is currently chairing the European Union, an extraordinary meeting of EU energy ministers has been scheduled for September 9 to agree on joint actions and solve the problem of a sharp increase in the cost of energy resources. The discussion will certainly touch on the topic of industry: enterprises in various industries are closed one after another due to excessively high fuel costs.

In Slovakia, the main European aluminum supplier Slovalco has been curtailing conveyors since September, the Dutch zinc plant Budel, the Romanian chemical giant Chimcomplex and the Polish fertilizer producer ANWIL have already suspended work, and the Norwegian chemical plant Yara is cutting capacity by up to 35%. Even in Germany, which, according to Habek, has accumulated fuel reserves acceptable for the winter, due to the inability to pay the gas tax, it closes regional branches and is ready to completely stop the large ammonia producer SKW Sticksoffwerke Piesteritz.

Although from time to time the quotes of “blue fuel” are adjusted downward, the cost of raw materials is still at an exorbitant level – according to Deputy Chairman of the Security Council Dmitry Medvedev, by the end of the year, a thousand cubic meters may rise in price to $5,000.

What measures will the European Union take to calm energy prices and save the economy of its members? In March, when there was a previous jump in quotations to $3,900, the leaders of the countries of the continent began to actively advise residents to save fuel in any way.

Both then and now, the countries of the European Union could save their population from the cold winter by allowing the launch of Nord Stream 2, a ready-to-operate pipeline capable of leveling the shutdown of their “big brother”. Nevertheless, Brussels is not looking for easy ways and only tightens its unfriendly policy towards our country.

According to the leading Italian newspapers la Repubblica and la Stampa, the same Habek, in the chat of the EU energy ministers, announced the readiness of the German authorities to discuss the introduction of a maximum price for Russian gas imports at the pan-European level and was supported by his Italian colleague Roberto Cingolani, who called the implementation of such an idea “historical result”. Greek Prime Minister Kyriakos Mitsotakis also spoke about the introduction of a natural gas price ceiling in the EU, but he had in mind the elimination of the binding of the cost of “blue fuel” to electricity price tariffs.

According to Gleb Finkelshtein, a specialist in the department of strategic research at Total Research, for the time being Russia should not perceive the proposal to introduce a ceiling on gas prices as a serious threat to energy exports. Long-term deliveries should not be affected – renegotiating such contracts is extremely difficult, and therefore unlikely. “In addition, it is not clear on the basis of what criteria and conditions the maximum allowable cost of Russian raw materials will be calculated.

Now prices have dropped to $2,500 per thousand cubic meters, and a week ago gas cost a thousand more. With such volatility, it is almost impossible to calculate at least a relatively fair upper threshold for the cost of fuel. Most likely, the discussion of the idea of ​​a “gas price ceiling” will take place at the same sluggish pace as the agreement on the maximum cost of Russian oil, since all interested participants understand that Russia will not sell energy resources much cheaper than the market, ”the expert believes.