On Wednesday Russian President Vladimir Putin declared that the Nord Stream 2 pipeline to Germany is fully ready and prepared to start pumping gas exports, amid a continued hold-up in regulatory approval on the German side.
Hailing the completion of the $11 billion natural gas pipeline which the US had long worked to block, Putin told a government meeting which was attended by Gazprom head Alexei Miller, "I’d like to congratulate Gazprom and your partners in Nord Stream 2 on the completion of work and the creation of this additional large trunk-route and that it is ready for work," according to Reuters.
Putin announced for the first time the second stretch of the 1,200+km pipeline has been filled with gas, and crucially asserted it's going online will inevitably reduce gas prices in Europe - which have recently hit record highs - including in Ukraine. He said once gas starts flowing, an "immediate" positive impact will be felt on the market.
"This, for sure, will have an immediate impact on price on the market, on the spot. And all the countries, the consumers in those countries that consume the Russian gas, of course, will feel it themselves," Putin described. However, the hold-up in certification is expected to continue, not expected to come via German regulators before the end of the first half of 2022, Reuters writes.
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On the same day in a separate venue and interview, a high ranking Kremlin official blasted Europe's soaring gas prices as but a crisis of its own making, due largely to its poor planning. Deputy Prime Minister Alexander Novak said, "It is difficult to say when the high prices period will end. In my opinion, there must be a gas supply covering the demand in Europe in full scope. Appropriate reserves in underground gas storages must be created, required to reliably pass through the winter season."
That's when he added: "If the greater portion of consumption in Europe is supported on account of long-term deliveries from Russia, Algeria, and Norway, then the situation with prices will be more stable," Novak said. "One of the reasons for the energy crisis in Europe is lack of planning," the official asserted. European officials, he said, placed too many hopes on the market, "on spot gas deliveries, which are present today and missing tomorrow."
Meanwhile, Washington may not be done with NS2 sanctions - after Biden previously backed down on strictly enforcing Trump era sanctions on the German side of the project...
Echoing Putin's comments, Novak underscored that Russia is right now physically ready to meet demand: "The resource base available in Russia makes it possible to meet demands of European consumers in any volumes." But he also emphasized that Gazprom "needs long-term contracts because huge investments are required to scale up production, with the payback during the long term," according to TASS.
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President Putin asserted that once gas starts flowing, an immediate positive impact on gas and energy prices in the market will be felt.
The energy crisis embroiling the EU is of their own making. The EU mismanaged the market and misjudged its own gas requirements by placing its hopes on spot gas deliveries, which are present today and missing tomorrow.
The EU Secretariat has complicated matters further by playing politics with Nord Stream 2 finding one excuse after another to delay its certification under pressure from the United States and its allies inside the EU namely, Poland and the Baltics States and also using alleged Russian plans to invade Ukraine as excuses to not certify the pipeline.
If the Europeans want additional and regular Russian gas supplies, then they will have to certify Nord Stream 2 at the utmost speed and also sign long-term contracts with Russian gas giant Gazprom. The alternative is that they will shiver this winter and still pay through the nose for their energy needs.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London