Europe, keep calm and pay for Russian gas to stay warm

Gas prices in Europe set new records, and so do Gazprom's share prices, which is not surprising at all. At the same time, the current state of affairs may have negative consequences both for Gazprom and for Russia as a whole.

Gas crisis in Europe

Many European politicians and journalists say that Europe's current issues with gas prices are related to Russia's stance on the problem. Allegedly, this is how Russia is trying to influence the process of launching the Nord Stream 2 gas pipeline system.

At the same time, Russian officials, including Gazprom representatives, say that it is impossible to simply supply as much gas to Europe as the Europeans need.

Gazprom fulfils all of its contractual obligations. The Russian natural gas monopoly does not violate anything when it does not lease additional capacities for the transportation of natural gas via Poland and Ukraine, although it may seem, however, that Gazprom must do it against its own will.

There is another aspect to the problem. A few days ago, Sergei Kapitonov, a gas analyst at the Energy Center of the Moscow School of Management, noted that the magic of Gazprom may soon go up in smoke.

"This magic may soon get dispelled in the event it is not Gazprom that comes to the rescue of Europe, but let's say, Norway or liquefied gas suppliers, who would be able to quickly redirect gas supplies to the shores of Europe when the price situation changes," said Sergei Kapitonov.

According to him, Europe may start investing more actively in energy transition. The Europeans may start to refuse from the use of natural gas when they come to realise how much the gas crisis of 2021 cost them. The stabilization of the gas market in Europe is beneficial not only to bankrupt enterprises, but also to Gazprom, the analyst said.

Many experts, however, believe that Europe may face even more serious problems if it starts the process to substitute natural gas with other types of fuel. After all, the question is not only about environmentally friendly electricity — the main question is about the price. In September, wind generators were idle in Europe due to calm weather.

Again, with regard to natural liquefied gas supplies, this option can be possible only against the backdrop of a sharp drop in prices in Asia.

There are also doubts about Norway's ability to supply as much gas as Europe needs. Increasing production is difficult, and it will take at least several months to accomplish this goal. Plus, one needs to increase production not to harm one's own profit.