Europe On Edge After Russia Unexpectedly Halts Gas Shipments Via Key Pipeline
In the middle of last week, an increasingly cold Europe exhaled a collective breath of relief when Russian president Vladimir Putin told Gazprom CEO Alexey Miller to "start gradual and planned work to raise gas volumes in your inventories in Europe: in Austria and Germany." While markets were focused on the (latest) promise by the Kremlin to boost output to Europe, we said that this was just another chapter in Russia's "cat and mouse" game with a soon to be freezing Europe, that the key word here was "gradual", and that anyone expecting a sudden surge in Russian nat gas shipments to Europe should not hold their breath as "Putin has been very clear in laying out Russia's ask to save Europe: activate the Nord Stream 2 pipeline. As long as Europe's bureaucrats refuse to comply, any hope that electricity costs will slide in the coming weeks will be at best - pardon the pun - a pipe dream."
We didn't have long to wait to be once again proven right: on Saturday, Russian gas supplies through the Yamal - Europe pipeline via Poland to Germany had come to a sudden, unexpected, and screeching halt.
While this was merely the latest political move in the escalating game over Europe's energy future, with Putin making it very clear who has all the leverage, Gazprom was quick to deny what is patently obvious, and said that European customers' natural gas requirements were being met as Russia sends gas to western Europe by several different routes, besides the the Yamal - Europe pipeline, which has an annual capacity of up to 33 billion cubic metres.
Russian gas export flows have been closely watched as gas prices in Europe have soared amid economic recovery and low inventories. This website was one of the first to anticipate the endgame, writing on August 3 "From Russia With 50% Less Supply: European Nat Gas Prices Explode To Record Highs As Putin Turns The Screws."
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