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The European energy system is currently unstable and could face challenges and shortages, according to Russia’s state-controlled gas giant Gazprom, whose deliveries to Europe have slumped since the Russian invasion of Ukraine.
“The fact that the systemic deficit has not gone away is manifested not only by the higher price level in 2023 compared to the pre-Covid years, but also by the persistence of a stable contango in the natural gas market,” Reuters quoted senior Gazprom managers Sergei Komlev and Alexander Shapin as saying in an in-house magazine.
“This price behaviour means that, according to market participants, the energy security system in Europe, built in an emergency mode, is unstable and faces new challenges,” Gazprom says.
At the end of the 2022/2023 winter heating season, Gazprom claimed that Europe would find it very difficult to refill its natural gas stockpiles ahead of next winter.
Just ahead of 2023/2024 winter, gas storage sites in the EU were 96% full as of October 1, according to data from Gas Infrastructure Europe. Europe hit its target to have storage 90% full by November 1 month in advance.
This year, Gazprom’s exports to Europe have slumped and dragged the gas giant’s profits down this year compared to 2022. Gazprom has reported a massive drop in its first-half net profit as deliveries to Europe plunged compared to the same period in 2022 when Russia was still supplying pipeline gas to its European customers.
The major drop in Gazprom’s gas deliveries to key customers was due to the halt of Russian pipeline gas exports to nearly all European countries. Weeks after the Russian invasion of Ukraine in early 2022, Russia cut off supply to Poland, Bulgaria, and Finland.
Then Gazprom started to reduce supply via the Nord Stream pipeline to Germany in June 2022, claiming an inability to service gas turbine maintenance outside Russia due to the Western sanctions against Moscow for the invasion of Ukraine. This was weeks before the sabotage of the Nord Stream pipelines at the end of September 2022, which definitively closed all pipeline gas routes of Russia’s gas to Germany.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.