Gazprom, the world’s largest gas supplier operating out of Russia, is not in a rush to move forward with supplying gas through the Nord Stream 2 pipeline, causing some anxiety in the market.
There are several reasons for their patient position. Sources state that windfall revenues from high European gas prices have encouraged Gazprom not to start pumping gas before certification and it will not press Germany to speed up the process. For the July-September quarter, the company reported an all-time high quarterly net profit of 582 billion roubles ($8 billion).
Though the pipeline was completed in September with two of its lines filled with gas in anticipation of German approval, the Swiss-based consortium regulating the project had to suspend this crucial step as it still needs to form a company under German law to obtain an operating licence. This could delay the start of operations till March 2022.
Coupled with current strained relations with the West and the recent handover in German leadership, the anonymous source at Gazprom stated, “We don’t want to seek faster approval for the pipeline. Now it’s Germany that is in charge.”
Angela Merkel, the long-serving former Chancellor of Germany who recently stepped down, supported the pipeline project. The Kremlin are keen to see how the new German leadership will work with Russia especially as Gazprom is Russia’s biggest taxpayer. Another source confirmed that Gazprom was “feeling great” and expected prices next year to remain high as gas sources are forced to remain short as their additional supplies were not yet on stream.
Russia supplies 35% of Europe’s natural gas needs. As electricity costs rose this autumn, many industries have had to curtail production forcing European consumers to pay more to heat their homes this winter.
European politicians, conscious of rising inflationary pressure on many fronts, accuse Russia of using gas prices as leverage in the dispute over the Nord Stream 2 operation and feel they could be supplying more. Once operational, the pipeline would double Russian gas export capacities to Europe via the Baltic Sea.
Read more about this key story, as reported by Reuters, here.