Is there any connection between the 2009 natural gas crisis in Ukraine, NordStream and today’s energy crisis? I’ve witnessed too much in my years as a journalist to believe the past has no bearing on the present. Experts claim gas prices skyrocketed because Europe’s reserves have nearly depleted with winter just around the corner, that the demand on the Asian market has gone up, that the economy has picked up its growth after the first year of pandemic, or that consumption went up due to a colder winter. All true, except that you can not ignore the Russians.
I believe even the most ignorant European knows that his country, a member of the European Union, depends on a great extent, either directly or indirectly, on Russian gas imports. This brings to mind the 2009 crisis, when in January, with winter in full swing, Russia turned off the tap on its deliveries to Europe via Ukraine. At the time, Gazprom highlighted the outstanding debt, accusing Kiev of stealing gas, and demanded a new price, 250 USD per thousand cubic meters. It was a ruse frequently employed by the Russians, except that the 2009 dispute lasted some 20 days, during which time the energy reserves of countries in Central Europe and the Balkans depleted. One could argue the Russians were thus seeking to get a better price, and of course, strong-arm Ukraine to take the deal.
A telegram sent by the US Embassy to Moscow in November 2008, when the so-called gas war was still in the early stages of threats to cut off gas deliveries, shows that Russia’s decision actually sought to obtain the greenlight required to kick-off the NordStream and SouthStream projects. Both projects excluded Ukraine from the trajectory of gas supplies. The document was eventually published by Wikileaks. A similar telegram quoted the Ukrainian defense minister of 2009, Yuriy Yekhanurov, while trying to explain to the American ambassador to Kiev at the time that Russia wants to own the monopoly on Russian gas exports to Europe.
The Russians designed the new pipeline in the name of energy security. Running on the bed of the Baltic Sea, from the very beginning the project was met with reluctance by Europeans, who failed to bring to competition the Nabucco project, the pipeline supposed to transport gas from the Caspian region and Central Asia to Europe via Turkey, bypassing Russia but transiting Bulgaria, Romania, Hungary and Austria. The project collapsed in its early stages, and was soon replaced with other pipeline projects that keep Russia as a supplier.
Vladimir Putin’s plans during his terms as both president and prime minister have had two main goals: to take Ukraine out of the gas market, and thus silence any political regime in Kiev, and to destabilize the European Union by means of repeated natural gas crises.
Before this October’s summit in Brussels devoted to the energy crisis, European Commission president, Ursula von der Leyen, said that, since the community bloc imports 90% of its gas mainly from Russia, its strategic rival, this clearly makes Europe vulnerable. This was hardly news. The novelty about the European Commission president’s statement is the newly-created context.
As late as this summer, the European Commission adopted the so-called Green Deal, stipulating that member states must reduce their greenhouse gas emissions to zero by 2050. So, this is a crucial time for Russia, a country whose gas exports to the old continent currently account for 70% of total exports, while 43% of the EU’s total consumption is covered by Russian gas imports. It’s also crucial the EU doesn’t give in to Russian blackmail, but rather accelerate its transition to clean energy, whose price will eventually go down.
Whereas in previous years Russia kept toying with the valve, turning the gas on and off and putting more pressure on the European Union, which seemed to be desperately looking for a way out of this conundrum, this year Europe’s defenses are more robust. First of all, the European Commission ordered the acquisition of natural gas from spot markets, thus putting an end to long-term contracts tying European states to Russia. And this is driving Vladimir Putin mad, the Russian president claiming his country observed its commitments towards its partners, countries such as Hungary, for instance, with which it recently signed a 15-year contract. This also explains why the EU reprimanded Russia for not expanding its gas reserves and not supplementing its gas deliveries, as it did in previous years.
What is Vladimir Putin really trying to achieve by challenging short-term contracts? On July 14, the European Commission adopted a series of proposals meant to adjust EU policies in the fields of climate, energy, transport and taxation, in order to reduce by at least 55% its net greenhouse gas emissions by 2030 compared to the level of the 1990s. That will be the next stage. Simple math shows that any contract signed right now for a period of 15 years, which is what Hungary did, would thus delay the implementation of the Green Deal. In other words, the Green Deal would spell major losses for Russia in the energy sector, on the one hand, and considerably less opportunities for Russia to play power games on the continent, on the other hand.
But there’s something else bothering the Kremlin leader, something he referred to loud and clear during Energy Week: the NordStream 2 pipeline, which Vladimir Putin now describes as the winning solution out of the current energy crisis. Once it is rendered operational, the pipeline is expected to transport some 55 billion cubic meters of gas to Germany every year. The problem is that, although it was completed last month and is currently undergoing trials, NordStream 2 still hasn’t obtained the functioning permits from the German Energy Agency. The new Government in Berlin is nowhere in sight, and the future ruling coalition will include the Greens, who have repeatedly argued against the project.
The German Energy Agency has contacted representatives of the NordStream 2 consortium, asking for clear evidence that all criteria demanded by Germany and the EU have been met. Without the permit issued by the Bundesnetzagentur, the pipeline will not be able to deliver any gas, despite having been finalized last month. The German Energy Agency is expected to issue the permit by January 8, 2022. Even so, the European Commission will still have to give its approval.
Can Gazprom disregard the EU’s rules and start transporting gas? The federal energy agency cannot stop that from happening, but it can hand out steep fines to the operator, in this case Gazprom. And functioning permits in compliance with the European Gas Directive are mandatory. In other words, the pipeline cannot be used by a single operator, in this case Gazprom. Therefore, according to European regulations, Berlin and Brussels will have to decide together how much of the pipeline’s capacity will be earmarked to Gazprom.
The Bundesnetzagentur has two months left to make a decision, during which time a lot can happen. One thing is for certain: a cold front is approaching from Russia!
