As Europe races to fill natural gas storage before winter, Russia Halts Nord Stream Gas Pipeline, Ratcheting Up Pressure on Europe.
Russia shut down its main artery for natural gas to Europe for maintenance on Wednesday, in what Western governments see as the latest salvo in the Kremlin’s economic war on the continent.
Moscow has already throttled back deliveries over the Nord Stream pipeline—which links Russia’s prolific Siberian gas fields with Germany under the Baltic Sea—to just 20% of its maximum capacity, citing technical issues with its turbines. European officials have dismissed these explanations and have called the gas cuts an economic attack in retaliation for supporting Ukraine in the war.
Unlike the 10-day annual maintenance in July, the current Nord Stream shut-off caught officials and traders by surprise when it was announced earlier this month. Maintenance operations are usually telegraphed well in advance so that utilities and traders can make alternative arrangements.
While Gazprom restored gas flows following the works in July, it limited supplies just days later, citing technical problems with turbines.
Energy Overhaul
Burning Gas
As Europe’s energy costs skyrocket, Russia is burning off large amounts of natural gas, according to analysis shared with BBC News. The plant, near the border with Finland, is burning an estimated $10m worth of gas every day. The gas would previously have been exported to Germany.
Q: Why would Russia do that?
A: It’s about well pressure and economic war
It’s hard to shut down and restart a well at a moments notice. Well pressure, outside temperatures, and maintenance costs come into play.
If Russia does not have the storage and does not want to supply the EU then burning it off makes economic sense.
Military War and Economic War
Russia started the war with Ukraine, but the US and EU started an economic war with sanctions.
Those sanctions have backfired miserably as predicted in advance in this corner.
Russia Is Making Heaps of Money From Oil
Even selling oil at a discount, Russia is making record amounts of money on oil. The New York Times ridiculously says Russia Is Making Heaps of Money From Oil, but There Is a Way to Stop That
Supposedly, the way to stop the profits is a buyers cartel. Such talk is ridiculous but has been going on for months.
There are too many countries willing to buy Russian oil at a discount for the US and EU to set a price. Moreover, Saudi Arabia can always slow production if price drops are too substantial.
A Laughable Explanation of the G7 Oil Price Buyers’ Cartel Emerges
I wrote about the silliness of the idea on June 28 in A Laughable Explanation of the G7 Oil Price Buyers’ Cartel Emerges
The G7 does not want Russia to sell any oil but if they succeeded, the price has to rise unless production picks up elsewhere or demand drops.
Rather than admit economic fundamentals, G7 leaders, especially Biden and Macron keep doubling down on dumber and dumber ideas.
India and China are willing buyers. China alone is sufficient.
How Stupidity Happens
What’s Next?
Putin is the only one who could possibly know whether Russia turns the gas back on this Saturday and at what rate.
Natural gas futures in the EU have declined a whopping 29 percent in the past five days. That’s a market belief that things may be as bad as they get.
Flows are only 20% of normal, yet EU winter storage is about 85% where it needs to be.
However, Putin will not want the EU to fill its tanks before Winter so take that into consideration.
EU Declares Energy Crisis ‘Emergency’, the US Will Not Be Immune
In case you missed it, please consider EU Declares Energy Crisis ‘Emergency’, the US Will Not Be Immune
This post originated at MishTalk.Com.
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Mish
“The Freeport outage illustrates how US LNG exports help to keep a lid on soaring European energy prices, while driving up domestic prices. Put simply, more US gas in Europe means less gas in America. So far, the US has enjoyed the economic benefits of its cheap shale gas bounty on the road to becoming a world player on the global LNG stage. Soon, it will have to choose between the two.
Industrial Energy Consumers of America, a Washington-based trade body that has been campaigning for years to cap US gas exports, has seized on this moment to drive home its message: US LNG is hurting American industry.”
“So, if US gas demand won’t fall to match rising exports, can production keep pace? Shale gas output grew spectacularly in the 2010s. A net increase in supply of 20Bcf/d since 2016 far outstripped the 10Bcf/d of new LNG export demand, creating the structural surplus that kept Henry Hub at a structural discount to prices in global gas markets – underpinning the original economic case for LNG exports.
However, field declines, constraints on investment and broken supply chains mean the US gas industry is at an inflection point. The Permian, Marcellus and Haynesville shale plays that drive supply growth are rapidly approaching peak production, tipping the US gas market from structural surplus to structural deficit.”
“Sensible commentary on German affairs is often to be found only beyond our borders. As an editorial in the Neue Zürcher Zeitung puts it: “If the Federal Republic shuts down its last three nuclear power plants, this winter of all times, then the country is beyond all help.”
Are you an expert to categorically state why it does not make economic sense? I guess not. Can’t expect much from Dumbocrat voters and equally dumb DONORcrat leaders, can we?
we can expect them to get your undies in a bunch.
Yo, the wars that McCain started are still with us!!!! And his victims are still dead and maimed. Ten years from now, Biden would have croaked. So? Then it wouldn’t matter that he took us to the threshold of nuclear war on not one, but two fronts? What a load of crock! Sheesh, the idiocy that you display is astounding!
When were you born? Last night??!!
In Europe, governments want to alleviate the dire pressures on households as well as energy-intensive and small businesses, while letting spiralling prices, pleas to consume less and fear about the coming winter drive down demand. Fiscally, this means state funding to reduce rising energy bills by subsidising distributors, as in France, or transferring money to citizens to pay those bills, as in the UK.”
Thanks. Call it whatever you want. I don’t mind. As far as I’m concerned its a h*ll of a lot better than all the constant whining and b*tching from the conspiracy kooks that frequent this blog. I don’t think I have ever seen a single piece of useful info from any of them. They are a waste of time. Which is why I have used the ignore feature on so many of them.
“Wow! This is why I avoid most political discussions. I struggle to understand the number of people here who hate their own government and their allies governments so much that they end up being pro-Russian. ”
I like having luxury. I will leave the blame-game to the morons here. They can waste as much of their time as they want blaming the government for everything.
“Australia will decide in October 2022 whether to curb exports of LNG after the Australian Competition & Consumer Commission (ACCC) urged restrictions. Indeed, according to forecasts from the ACCC, the country could face a shortfall and soaring prices in 2023 because of declining output at offshore fields that supply the east coast, home to almost nine-tenths of the Australian population. Specifically, the east coast of the country is expected to produce 49.5 bcm (1,981 PJ) of gas in 2023 of which 32.5 bcm (1,299 PJ), or 66%, is expected to be exported overseas under long term contracts. In addition, LNG exporters are forecasted to liquefy a further 4.2 bcm (167 PJ) over what they require to meet their contractual commitments. If LNG exporters sell all of their excess gas to overseas markets, the region would face a supply shortfall of 1.4 bcm (56 PJ).
The competition regulator recommended the government to pull the trigger on the Australian Domestic Gas Supply Mechanism, which can be used to oblige LNG exporters to divert gas to the domestic market to avert shortfalls. Exports curbs would likely impact the Gladstone LNG export plant (10.5 bcm/year), owned by Santos (30%), Petronas (27,5%), TotalEnergies (27.5%) and Kogas (15%). In 2021, Australia was the world’s largest LNG exporter, with 105.6 bcm, surpassing Qatar (105.1 bcm) and the United States (92.3 bcm).”