The decree issued by Putin at the end of March, which obliges states and energy companies to pay for Russian gas in rubles by opening a second current account, the K-account, with Gazprombank in addition to the euro current account, has already had an effect. a Europe that is moving in no particular order and that does not yet have a solution in hand.
While Germany and Austria have reiterated they will continue to pay for methane in euros, Hungary, which is 85% dependent on its gas supply and 65% dependent on its oil imports from Russia, has said it will use the methane system in rubles.
On the other hand, according to the Bloomberg agency, which cites an anonymous source close to Gazprom, on the front line of private energy companies, ten European companies (their names are not given) have already opened the necessary accounts to comply with the dictates of President Putin .
But whoever complies with this request commits a violation of the sanctions against Russia for the EU. Brussels cannot accept that “companies are obliged to open a second account” and that the payment “is not considered complete until it is converted into rubles”. In this gas war, which could also push for a European embargo on Siberian methane, “Fear warns Michel MarseillesPresident of FederPetroli – is that impressive chaos is about to break out”.
Russia has announced that it has stopped supplying gas to Poland and Bulgaria. what could happen now
Poland has been working to create its own autonomy from both Russian gas and oil for some time, so much so that it has regasifiers and has never stopped drilling. Not only that, they already source liquefied gas from the US and Qatar, and a new gas supply canal is under construction, the Baltic Pipe gas pipeline, which is due to connect Poland to the fields of the Norwegian North Sea from October.
But can Russia decide to cut off supplies or demand payments in rubles, thereby violating contracts already signed?
Since the treaties generally provide for penalties in the event of non-compliance by either party, the disruption of hydrocarbon supplies is an issue that obviously has trade and international law implications, so Poland itself has spoken out about breaching the agreements. But one crucial detail must not be forgotten.
Which?
It is true that Moscow has taken strong action, demanding payments in rubles in contracts agreed in euros or dollars, but it is also true that we are facing an international scenario in which economic sanctions have been adopted.
That’s why?
While there may be an international court before which allegations of breach of contract may be brought, it is important to remember that this is not a purely commercial dispute. We are in a state of emergency, war and sanctions. It’s not about being for or against the Russians, it’s a war situation for everyone. It’s a very confused and abnormal business.
Some companies have even threatened legal action against Russia…
True. But how far can we go? What will the competent court be? Will it be a dish in Russia or Poland or somewhere else? I think the main interest is that the raw material, the gas, can never fail. I am therefore somewhat hesitant that a process can be achieved. It seems like a somewhat unrealistic ending to me. Also because the energy markets are very complex and a judge must certainly take this complexity into account.
According to the Tass Agency, the President of the Duma of Russia Vyacheslav Volodin said that “gas supplies to enemy countries that refuse to pay for fuel in rubles should be suspended.” A plausible threat to a country that desperately needs Russia to sell its gas?
All the gas that Russia doesn’t sell to Europe results in an economic loss, but Moscow benefits from it as a stockpile of internal reserves that it can always sell on to third countries. In fact, Russia still exports its methane, for example to the Middle East. However, given that Italy would also be among the enemy countries, it should be emphasized that by blocking gas flows to our country, Russia would only have to lose economic revenues.
However, the shadow of a possible Russian gas embargo lingers on. The EU is considering it, Germany is against it, but Italy has already announced that what Brussels decides will follow. But if embargo means rationing, how do you prepare? Who makes a plan?
At this point, calibrated rationing of air conditioning temperatures will come into effect shortly, but only for public administration. But it’s not yet clear what the roof might be. However, there is no body responsible for monitoring and control, so it is hypothesized that an officer will be appointed to be responsible for the establishment of this rationing plan, should rationing ever occur, through a dedicated task force will. You need good organization otherwise chaos will ensue and it will be impossible to enforce.
Who decides which deliveries are stopped? How, how much and when is needs rationing carried out?
The gas pipeline compression stations can be managed by opening or slowing down the gas flows, an activity ensured by computerized systems. The problem is that companies could be forced to close their furnaces, as they are already doing, which will severely affect production chains and transport, and this will determine a new order in our economy. And don’t forget that our refineries run on gas… But let’s see what the government and the engineers have to say about that.
The really critical period in case of an embargo will be next autumn-winter. Could we have arrived unprepared and uncovered given how we handle regassing and storage?
Warehouses in Italy have always struggled with various problems because the warehouse process is not yet optimal. Unfortunately, opening new sites as well as digging new wells is not easy, everything is closed for regulatory reasons. In addition, the Ministry of Ecological Transition launched bidding for the purchase and storage of gas, but it was a failure given the insane price hikes for methane. To date, we find ourselves in a somewhat borderline situation.
And the carburetors?
In this case, too, everything has been closed for over 10 years and there are systems with downtimes. But the supply of LNG for the regasifiers also comes from abroad, at prices that are certainly not for us to decide. And LNG offers only one logistical advantage.
In what sense?
The gas, when it turns from gaseous to liquid, can be stowed in a ship in quantities 600 times greater. So you can carry more. But once it arrives in port, it needs to be restored to its original condition.
Italy is said to be looking for two ships to serve as mobile regasifiers. Why is?
These really huge ships are called Frsu: they’re little floating refineries that sit alongside the platforms and act as a bit of a regas. They are ships that we will rent at a high cost, but not as much as the price of LNG. I don’t think modernizing the regasification plants is the most effective strategy.
Because?
Because in Italy new wells could be tapped. But now it is too late, because it will take at least three years.
Instead, we are again forced to import gas from Africa and the Middle East …
But be careful: To date, despite all the contracts being signed in Africa and the Middle East, we do not know at what prices we will buy hydrocarbons and it will take some time between signing and production. We can only hope that these agreements will bear fruit as soon as possible. But I fear shocking chaos is about to ensue.
What does that make him think?
Let’s take the case of Algeria: in order to provide us with more gas, it has to find new fields and dig new wells, but where will it get the resources necessary for these investments?
Those are activities that will launch a nice subsidiary of the Italian oil system though, don’t you think?
Of course, but it won’t just be an opportunity for us: Algeria will compete and everyone will be able to participate.
Possible gas suppliers also include Egypt, where the Zhor field, one of the largest in the world, was discovered. Will it be our ace up our sleeve?
No, unfortunately not, because it’s not gas for Italy, it’s for Egypt’s own consumption.
Faster solutions?
There is no immediate solution to this crisis, even if many ships loaded with LNG arrive, because Italy does not have a methanation plan and there are areas that are not yet served by a network of gas pipelines.
(Marco Biscella)
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