EU Energy Update
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A senior U.S. energy consultant warned that Europe is “life-threatening” this winter, as the continent has entered a season of low natural gas inventories and reduced supply threats.
President Joe Biden, senior adviser to the State Department for energy security, Amos Hokstein, stated that Russia “is under-supplied in the market compared to its traditional supply” and has caused prices to hit record highs.
“If you experience a really cold winter in January and February, you may run out of supplies. This is where I worry about it,” he told the Financial Times during a visit to Kiev on Saturday, highlighting the United States. Worried about Europe’s dependence on Russia’s energy flows. “This is not just some geopolitical game. People’s lives are at stake.”
As a State Department veteran in the administration of President Barack Obama and a former adviser to Vice President Biden, Hawkestein was appointed last month, and he immediately focused on mitigating the risks posed by Russia’s North Stream 2 natural gas pipeline. Critics claim that the Kremlin will use the pipeline to sabotage Ukraine — bypass it and deprive it of transit fees — and increase its influence on EU energy supplies.
This $11 billion pipeline will be opened before the end of this year and will transport 55 billion cubic meters of natural gas to Europe every year. Ukrainian officials accused Moscow of deliberately stifling supply in order to speed up the certification of NS2 to European regulators. This process is still in progress.
The Russian energy giant Gazprom has always stated that it has fulfilled all long-term contracts with European buyers, but has been criticized for not providing additional natural gas under tight supply conditions.
Russian President Vladimir Putin said last week that Europe’s high oil prices are partly the result of the European Commission’s “smart people” pushing for “market-based” pricing. This is obviously a mockery of the EU’s efforts to increase competition in the natural gas market. Russia dominates the supply side.
Other factors have also tightened the market, including the sharp decline in domestic production in Europe this year due to the coronavirus pandemic, demand for natural gas higher than high-polluting coal, and demand for LNG cargoes in Asia.
Energy executives warned that prices may remain high in the winter to the point that some energy-intensive industries may require strict Output and household spending may increase.
The United States has long opposed NS2, but the Biden administration reached a ceasefire agreement with Germany in July, requiring Berlin to impose sanctions on Russia if Russia “weaponizes” the pipeline, targeting Ukraine or other allies. The Biden administration earlier lifted sanctions on Nord Stream 2 AG, the pipeline operator owned by Gazprom.
Officials in Kiev and neighboring Poland firmly criticized the US-German agreement on the grounds that it did not provide specific guarantees for the safety or future flow of Russian gas through Ukraine and other Eastern European countries.
Hochstein made a speech during his visit to Kiev. He held talks with Ukrainian officials on the implementation of the US-German agreement to address these concerns, in part by persuading Gazprom to extend the gas transit agreement through Ukraine beyond 2024. “My expectation is that Horkstein said that the Russians will agree to “extend gas transportation through Ukraine.” Kiev claims that Russia has delayed in extending the transit agreement.
Hokstein said that although the United States believes that Russia has “weaponized natural gas for many years,” he did not say that Moscow has deliberately cut natural gas supplies in recent months-an action that may trigger additional sanctions on Moscow under the US-German agreement.