OIES Podcast Series: Impact of Russia-Ukraine War on Energy Markets Series – 15 – The importance of flows via Nord Stream
In this latest podcast from OIES James Henderson talks to Jack Sharples about his latest Energy Insight entitled “Falling like Dominoes: The impact of Nord Stream on Russian gas flows to Europe.” They discuss the fact that the decline in Nord Stream capacity in June and July should be seen in the context of a broader decline in Russian gas flows to Europe, which is due to a combination of Gazprom’s strategy of neither holding storage stocks in Europe nor selling additional spot volumes into the European market, physical pipeline capacity being taken offline, and flows under seven long-term contracts ceasing as a consequence of the war and its related sanctions. As a result of these factors the consequences of a long-term (partial or complete) cessation of flows via Nord Stream will now be felt beyond Germany as it would also affect countries in Central and Eastern Europe that were previously receiving most of their gas via Ukraine and other routes. As Jack highlights in the podcast, this is exactly the ‘domino effect’ that was seen when Nord Stream went offline for maintenance in mid-July. Indeed, he argues that Europe now faces a ‘race against time’ in what remains of summer 2022 to accumulate storage stocks and prepare to curb winter demand, in anticipation of significant potential supply constraints. In this situation, crucial questions remain: what is the near-term outlook for Russian pipeline gas supply to central and north-western Europe? Will those markets be able to both replenish storage in what remains of summer 2022, and subsequently ensure that supply meets demand in the coming winter? The analysis presented in the Insight and this podcast offers tentative conclusions, although the situation remains highly uncertain.