Senior managers at Gazprom, on Tuesday, hinted that a scarcity of natural gas was looming in the European Union because of instability in its energy market.
The unprecedented Western sanctions imposed last year against Russia and the deliberate destruction of Nord Stream 1 & 2 pipelines exacerbated a marked dip from Gazprom, formerly the bloc's foremost gas provider, to the 27-member union.
"The fact that the systemic deficit has not gone away is manifested not only by the higher price level in 2023 compared with the pre-Covid years but also by the persistence of a stable contango in the natural gas market," noted Gazprom’s senior managers, Aleksandr Shapin and Sergey Komlev.
Since last year, the European Union tilted towards curtailing its dependency on Russian gas and substituting it with other liquefied natural gas import sources such as Qatar, the US, etc. Thus, the United States has assumed the role of the predominant gas supplier to the bloc, constituting up to 35 percent of its imports.
Subsequently, Gazprom's top managers alluded to the ensuing energy crisis rocking the bloc as dependent on the cessation of relations with the energy giant. They stressed that this is principally attributed to a substantial uptick in the share of LNG considered "less reliable" compared with pipeline-delivered gas, which is predominantly provided through extended contractual commitments.
Western economic circles and political leaders have raised concerns about the problems of adopting pricier and less eco-friendly LNG. Some have gone so far as to characterize the sabotage of the Nord Stream project as an act of "economic warfare" with repercussions for the entire union.
Before the Ukraine conflict, the European Union received a substantial portion of its natural gas supply, roughly 155 billion cubic meters (bcm), from Russia via pipelines. In 2022, however, these deliveries plummeted to 60 bcm, and the EU is bracing itself for further cuts to 20 bcm.