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Russian Gas Diplomacy

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Édito Énergie
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Russian Gas Diplomacy
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Thank goodness our early warning systems during the cold war were not structured so we could see the flash at the same time we heard the warning. On Monday, the Russians notified the Europeans under an “Early Warning” agreement negotiated after the last Ukrainian gas cutoff that they had already cut gas flows to Belarus by 15% and that would increase cuts to 85% by the end of the week. Not very good news for the Belarusians who enjoy the most gasified economy in the world - everything there runs on gas.

Corps analyses

It was good of Gazprom to choose the first days of summer for this commercial dispute as European gas demand is off seasonally, demand recovery is slow and stocks are high - except of course in Poland and Lithuania (downstream from Belarus) where gas stocks as a percentage of import dependency are very low. The situation is even more difficult for Russia’s own exclave Kaliningrad.

The Russian expressed a willingness to dispatch monitors to attest to flows of gas to Europe being available at the Russian border should President Lukashenka make good on his threat to cut transit gas to Europe. Furthermore, the Russians suggest helpfully that the Europeans might want to establish an arbitration mechanism between Russia and Belarus?!

Somehow the Russians see themselves as having met their obligations to be responsible suppliers by notifying the Commission of a cutoff after the fact and suggesting Europe take upon itself the political responsibility of finding a solution. The Commission missed an opportunity at 09h00 Monday morning to reject the Russian “Early Warning” as totally unacceptable. Will the next early warning comes one frigid day in January when companies would be stretched to adjust?

Russia has entered into contracts to supply gas to Europe. They have on two major occasions disrupted supplies to Europe as a result of geopolitical and/or commercial disagreements with their “near abroad”. Many thought they would have recognized how much damage this kind of action has already done to their reputation as reliable suppliers. How much of the European impulse to diversify gas supplies is driven by this behavior?

Europe has been more than patient sorting through past Russian gas supply incidents and the policy measures undertaken in the EU to lower European vulnerability to Russian gas diplomacy are progressing. But an “Early Warning System” with Russia that shifts the responsibility of dealing with the consequences to Europe after the fact and that turns to Europe to negotiate a settlement doesn’t appear to be a very good solution.

We learn today that the issue has been “resolved” in the traditional non-transparent way. Perhaps this latest incident can provide an incentive for Europe to restore the burden of responsibility for gas deliveries to Europe back to the supplier who agreed to do so.

 

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William C. RAMSAY

Intitulé du poste

Directeur du Centre Energie de l'Ifri de 2008 à 2011, Conseiller de 2012 à 2016

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Climate & Energy
Center for Energy & Climate
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Ifri's Energy and Climate Center carries out activities and research on the geopolitical and geoeconomic issues of energy transitions such as energy security, competitiveness, control of value chains, and acceptability. Specialized in the study of European energy/climate policies as well as energy markets in Europe and around the world, its work also focuses on the energy and climate strategies of major powers such as the United States, China or India. It offers recognized expertise, enriched by international collaborations and events, particularly in Paris and Brussels.

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Can carbon markets make a breakthrough at COP29?

Date de publication
30 October 2024
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Voluntary carbon markets (VCMs) have a strong potential, notably to help bridge the climate finance gap, especially for Africa.

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Taiwan's Energy Supply: The Achilles Heel of National Security

Date de publication
22 October 2024
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Making Taiwan a “dead island” through “a blockade” and “disruption of energy supplies” leading to an “economic collapse.” This is how Colonel Zhang Chi of the People’s Liberation Army and professor at the National Defense University in Beijing described the objective of the Chinese military exercises in May 2024, following the inauguration of Taiwan’s new president, Lai Ching-te. Similar to the exercises that took place after Nancy Pelosi’s visit to Taipei in August 2022, China designated exercise zones facing Taiwan’s main ports, effectively simulating a military embargo on Taiwan. These maneuvers illustrate Beijing’s growing pressure on the island, which it aims to conquer, and push Taiwan to question its resilience capacity.

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India’s Broken Power Economics : Addressing DISCOM Challenges

Date de publication
15 October 2024
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India’s electricity demand is rising at an impressive annual rate of 9%. From 2014 to 2023, the country’s gross domestic product (GDP) surged from 1.95 trillion dollars ($) to $3.2 trillion (constant 2015 US$), and the nation is poised to maintain this upward trajectory, with projected growth rates exceeding 7% in 2024 and 2025.  Correspondingly, peak power demand has soared from 136 gigawatts (GW) in 2014 to 243 GW in 2024, positioning India as the world’s third-largest energy consumer. In the past decade, the country has increased its power generation capacity by a remarkable 190 GW, pushing its total installed capacity beyond 400 GW. 

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The Troubled Reorganization of Critical Raw Materials Value Chains: An Assessment of European De-risking Policies

Date de publication
30 September 2024
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With the demand for critical raw materials set to, at a minimum, double by 2030 in the context of the current energy transition policies, the concentration of critical raw materials (CRM) supplies and, even more, of refining capacities in a handful of countries has become one of the paramount issues in international, bilateral and national discussions. China’s dominant position and successive export controls on critical raw materials (lately, germanium, gallium, rare earths processing technology, graphite, antimony) point to a trend of weaponizing critical dependencies.

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