A recent news article published in the Spark Chronicles states that Putin burns gas because he cannot do without it- Corriere.it.
A spectacular gesture
Burning gas on the Finnish border – what Putin’s Gazprom is doing – the equivalent of burning banknotes. We’ve seen it done in a few movies, perhaps by a mobster in the mood for arrogant performances. a spectacular gesture but far from beneficial to one’s finances.
Putin he does it not because he can afford it, but because can’t do without it: his energy blackmail against Europe begins to show the rope. The unsold gas must be destroyed, with serious damage to Moscow’s finances, in order to avoid even greater damage: to the fields, to the plants, to the distribution network. this is the interesting thesis of two American experts in the energy sector, Paul Roderick Gregory of the Hoover Institution (Stanford) e Ramanan Krishnamoorti of the University of Houston, Texas. In an analysis published yesterday in the Wall Street Journal, the two experts had anticipated the “need” to burn gas to limit technical damage to plants and the network.
Gas is extracted in the Arctic regions of Russia
At the heart of the matter is the Nord Stream 1 gas pipeline which transports gas from Russia to the European Union. The gas is extracted in the Arctic regions of Russia. It enters the Nord Stream 1 gas pipeline in Vyborg, near the Finnish border: right where Gazprom is now burning it. From the Finnish border, Nord Stream 1 travels under the sea to Greifswald in Germany, where it connects with the European network. A parallel Nord Stream 2 pipeline whose construction was practically completed but what a state blocked by sanctions. Nord Stream 1 therefore remains the main artery that brings gas from Russia to the European Union. It has a maximum capacity of 62 billion cubic meters per year. Before the war in Ukraine, Gazprom was using it almost to the limit of capacity: from 2019 to 2021, Nord Stream transported 55 billion cubic meters per year.
After the invasion of Ukraine, the West has never included gas in the scope of the sanctions, however Putin made it a pressure weapon. It has imposed supply cuts to inflict economic damage on Europe. At the end of July Nord Stream was now carrying only 40% of gas of its maximum capacity. Then under the guise of maintenance work dropped to 20%. If it continues like this, by the end of 2022 it will have transported only 19 billion cubic meters instead of the usual 55 billion. We are well aware of the consequences for Europe and are likely to worsen in the autumn. Putin’s capacity for blackmail is unfolding in all of his power, and makes some say that sanctions only hurt Europe.
But what can Russia do with the gas it does not sell to Europeans? The oil that Moscow no longer exports to the West easily finds buyers, starting with India and China, albeit at discounted prices. Oil travels mostly on ships and is easy to divert from one market to another. Gas no, the part that is transported on a reduced ship and in any case requires the construction of particular plants (we know something: for the receiving countries they are the regasifiers, which correspond to specular and symmetrical plants that in the producing countries must transform the gas into liquid , then load it on special tankers).
Russia and China have reached an agreement
Russia and China have reached an agreement to build a new pipeline that connects them, but it will take years before it is ready. On the other hand, the gas that Gazprom is not supplying to the Europeans continues to flow from the fields, and something must be done with it. Store it? Russian gas storage capacities are already nearly exhausted. Close the “wells”, stop the extraction? It can be done by taking technical risks. The fields that stop supplying gas can suffer structural damage that compromise their return to production in later times.
Then there are the technical problems concerning the pipelines. All valves, accessories, sophisticated technical equipment that regulate the operation of gas pipelines, are subject to failures and deterioration if the pressure drops or goes to zero. These are problems that can be solved if there is a very high level of maintenance. But here the western economic sanctions intervene, which alienate large companies specialized in that type of sophisticated maintenance such as Halliburton, Baker Hughes, Schlumberger from Russia. To avoid problems and reduce the risk of serious damage to the pipeline, one expedient is precisely to burn the gas.
Even more substantial loss in the long run
Aside from the environmental damage, this means destroying a primary resource for the Russian economy. And just when Putin needs money to expand his army. It is self-harm, therefore, even if it is inevitable in the circumstances in which Putin has put himself alone. The damage of the gas burned adds, and aggravates it, to an even more substantial loss in the long run: credibility. Since the days of Communist leader Brezhnev – the 1970s – Moscow has built a reputation as a reliable partner for the supply of energy to Europe. A country like Germany had centered its economic model on cheap Russian gas and had based its foreign policy on the idea that trade with the East would make autocracies less and less hostile. Today Germany, like the whole of Europe, must perform a geo-economic twist by looking for energy elsewhere. The Russian gas burning on the Finnish border is destroying many things.
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Source: Spark Chronicles