As recently as April 2022, Russian flows were around 300 mcm/day, despite the tensions with Ukraine and the western sanctions imposed upon Russia. For context, the average supply from Russia in 2019 was over 470 mcm/day.
The drop in Russian supply to the European Union follows Russia’s demands to receive payment in roubles. Furthermore, Russian gas supplier Gazprom curbed the capacity of Nord Stream to just 40%, reducing Russian flows to the EU to around 100 mcm/day.
Nord Stream 1, which is majority-owned by Gazprom, is the single biggest pipeline bringing crucial supplies of Russian natural gas to Europe via Germany. The EU is heavily reliant on Russian gas. Last year, Russia supplied some 40 percent of the EU’s natural gas.
Why does Nord Stream 1 matter?
- Nord Stream 1, which is majority-owned by Gazprom, is the single biggest pipeline bringing crucial supplies of Russian natural gas to Europe via Germany.
- The EU is heavily reliant on Russian gas. Last year, Russia supplied some 40 percent of the EU’s natural gas.
- That has dropped significantly this year, straining energy-intensive industries and sending commodity prices through the roof.
- Maintenance work largely went unnoticed in the past, but the pipeline has now become a bargaining chip as Russia and the West exchange economic blows in response to Russia’s full-scale invasion of Ukraine launched in February.
Recent market movements
Recent movements in the market also indicate that Europe must begin its preparations for the termination of Russian gas supplies in the near future. Russia’s decision to reduce its gas exports to European countries could indicate further reductions in the future as Russia looks to gain some leverage in its war with Ukraine.
Since the start of the Ukraine invasion, Europe has been steadily reducing its reliance of Russian gas, dropping from around 40 percent to 20 percent. It now needs to take further measures, such as reducing demand, temporarily reopening coal-fired stations or keep ageing nuclear power stations open.
Find out more
Below, our Head of Flexible Purchasing and Energy Strategy, Latif Faiyaz, breaks down the key drivers affecting market behaviour this year.
Latif provides analysis of UK, European and global factors and provides a forecast for the remainder of the year.
Here’s the video 👇