Gas Spot Trading Market, Asian Demand Driving Up Prices Rather Than Russia - Expert
Sumaira FH Published October 28, 2021 | 08:32 PM
Markets for trading gas on the spot and large energy demands in Asia, rather than what is described as Russian market manipulation, have been driving up gas prices in Europe, says Samuel Furfari, a former top civil servant at the European Commission's energy directorate
BRUSSELS (UrduPoint News / Sputnik - 28th October, 2021) Markets for trading gas on the spot and large energy demands in Asia, rather than what is described as Russian market manipulation, have been driving up gas prices in Europe, says Samuel Furfari, a former top civil servant at the European Commission's energy directorate.
Tensions between Russia and the European Union soared alongside gas prices in September after many EU heavyweights pointed a finger at Russia for the fuel crunch, claiming it was curbing gas supplies. Russia insisted that it delivered on all contractual obligations.
"There is, unfortunately, a lot of anti-Russian political manipulation in Europe now, where politicians claim that Russia is withholding gas to drive up prices. This is totally false. What interest would Gazprom have in annoying its long-term customers in Europe for a small, very temporary benefit?" Furfari, a professor of energy geopolitics at ULB University in Belgium, told Sputnik.
He said that China, in particular, was whipping up global demand for gas. It is where the liquid natural gas (LNG) from the United States and Qatar is being reassigned in pursuit of more lucrative prices than in Europe. Successive US administrations have tried to cajole and then force Europe into buying more American LNG, culminating in US sanctions on EU companies and the new Russian pipeline.
"Well, today US gas carriers don't give a damn about Europe and divert their LNG ships to Asia; it is more profitable. This clearly shows that Europe needs long-term contracts with the closest and most obvious source of gas, Russia, which has never used the gas weapon with Europe," Furfari explained.
He predicted that gas prices would continue to rise into the spring on the back of the economic recovery and the seasonal demand. The German energy regulator is expected to certify the Nord Stream 2 underwater gas link with Russia ahead of the January 8 deadline, allowing Gazprom to pump more gas directly into European storage.
The Nord Stream 1 pipeline was delivering only half of its capacity of 55 billion cubic meters of natural gas at the height of the COVID-19 pandemic last year. With the economic recovery back on track, the doubling of the direct delivery capacity under the Baltic Sea to more than 100 billion cubic meters per year is "a very good thing," the expert added.
"Russian gas will hardly pass through Ukraine anymore, which will only have its own purchase contracts with Russia. Ukraine will no longer be able to threaten to cut off transit deliveries. In the event of a crisis, Europe can always help Ukraine with deliveries, coming from Poland in particular," he said.
Furfari called natural gas the energy source of the 21st century. He said Europe made the wrong choice by relying on renewables for electricity, the intermittence of which can only be offset by gas and coal-fired power stations. It now appears to be heading reluctantly toward a more obvious solution: using gas for heating, industrial production and electricity generation, coupled with renewables and nuclear power.
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