Nord Stream 2 Vessel Castoro 10 doing a AWTI in the Baltic Sea close to Ruegen (11.08.19) Press photo: Axel Schmidt/Nord Stream 2.

Ukraine says that Russia is causing the current crisis by not supplying enough gas and that they are doing so to push for the completion of Nord Stream 2. 

As winter is coming, the European gas prices are reaching record highs. UBN writes how the gas prices in Europe yesterday exceeded $1,000 per 1,000 cubic meters, and the high prices haven’t gotten unnoticed among politicians in Europe and Ukraine.

Olha Stefanishyna, the Ukrainian deputy prime minister, told EUobserver that the gas prices are manipulated by Russia. 

“We can see what’s happening with the gas prices, which we treat as an incident of hybrid warfare, basically… the signal Russia is sending to European capitals is: ‘We’re really manipulating prices, so you should launch Nord Stream 2 to stabilize the prices’. This is a clear narrative for us,” said Stefanishyna, calling for the EU to put its foot down. 

Natural gas prices in (USD/MMBtu) by Tradingseconomics:

She is not the only Ukrainian pointing fingers at Russia. Sergiy Makogon, CEO of Ukraine’s transmission system operator GTSOU, recently wrote a piece in the Atlantic Council, arguing that Russia is tightening its grip on the European gas market. 

“Nord Stream 2 is not yet operational, but the Kremlin’s tightening grip on energy supplies is already being felt across Europe. The price of gas futures continues to hit record highs and has increased by over 600% in a matter of twelve months,” Makogon wrote. 

“What we are currently witnessing in Europe is a rerun of the oil shocks America experienced in the 1970s. The commodity is different, the safeguards are stronger, but the underlying dynamics are the same,” he added. 

No shortage of capacity

Makogon clarifies that there isn’t any lack of capacity in the transit network and that it is instead the Russians who is to blame for the shortages and high prices in Europe. 

“Allowing the completion of Nord Stream 2 was always a terrible idea. Doing so under pressure from the Kremlin would set a dangerous precedent well beyond the realm of energy that Germany and Europe will inevitably come to regret,” he argues. 

In contrast, the Russian state-owned gas company Gazprom says that it “is supplying gas in accordance with requests of consumers according to current contractual commitments.” Kremlin Spokesman Dmitry Peskov recently said that the completion of Nord Stream 2 would positively affect the gas prices in Europe. 

“Obviously, the commissioning of Nord Stream 2 as soon as possible will substantially balance natural gas price parameters in Europe, including on the spot market,” he said.

Not everyone says it is Russia

While Ukraine is pointing its fingers at Russia, others claim that there are more reasons for the increasing gas prices in Europe. In an article in Al Jazeera, Jeff Currie, global head of commodities research at Goldman Sachs Group Inc., says that the rising costs are also due to “the war on climate change, the war on income inequality.”

“All of these dynamics lead to a structural rise in commodity demand against this whole idea of the revenge of the old economy,” he added. 

The investment company S&P Global recently wrote that Russia holds the key to fixing the crisis no matter what is the reason for the current spike in prices. 

“While European gas and power supply and demand hangs in balance, market participants look to controversial Nord Stream 2 for a sign of hope, as the project enters certification proceedings,” they wrote.