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Russian gas giant Gazprom makes £39m profit in North Sea

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Russian energy giant Gazprom reportedly earned €45 million from its North Sea Sillimanite gas field in the past year, as revealed in financial accounts. The Sillimanite field, situated in UK and Dutch waters, has been operational since 2020 and is a joint venture between Gazprom and German firm Wintershall. While the arrangement is not deemed illegal, criticism has arisen, particularly from UK Liberal Democrat leader Sir Ed Davey, who deems it “totally unacceptable” that gas from UK territory supports “Putin’s illegal war against Ukraine.” The UK government has pledged to escalate economic pressure on Russia, aligning with international sanctions aimed at restricting Russia’s funding for the conflict in Ukraine.

Gazprom International UK, a Gazprom subsidiary, reported a pre-tax profit of €45 million in 2022, with dividends paid to its immediate owner in the Netherlands. Although Gazprom executives, including CEO Alexei Miller, face UK sanctions, Gazprom itself is not directly sanctioned. The company continues to supply reduced gas volumes to continental Europe. Concerns have been raised about Gazprom’s financial activities, given its association with the Russian state, which is accused of financing militias engaged in the Ukraine conflict.

The UK government’s response to Gazprom’s financial activities in the North Sea has been met with criticism. Global Witness, a campaign group, described it as “an indictment of the UK’s approach to Russian oil and gas.” Despite the UK’s condemnation of the war, Gazprom’s subsidiary continues to operate in the North Sea, enriching Putin’s regime. The government spokesperson reiterated the commitment to denying Russia access to goods or technologies aiding its war efforts, vowing to intensify economic pressure until peace is secured in Ukraine.

Gazprom International UK’s financial disclosures reveal a total tax bill of €29 million, distributed between the UK and Dutch governments. This includes windfall taxes imposed in response to the surge in energy prices following the conflict in Ukraine. The company ceased its gas sale agreement with Wintershall, replacing it with a deal with the Swiss-based trading company Gunvor.

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Ukraine war: Russia to keep key gas pipeline to EU closed

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Concerns over energy supply this winter have increased as a result of Russia’s main gas pipeline to Europe not reopening as scheduled on Saturday. The Nord Stream 1 pipeline may be permanently shut down after the state-owned energy company Gazprom reported discovering a leak.

Germany-bound pipeline has been closed for three days for what Gazprom referred to as maintenance work. In the midst of the turmoil in Ukraine, Europe accused Russia of exploiting its gas supply to threaten Europe. Moscow disputes this accusation. Since Russia invaded Ukraine, energy prices have increased sharply, and dwindling supplies could cause prices to rise even more.

Families in the EU are worried that they won’t be able to pay the expense of heating this winter.

The UK might be impacted as well. Although not dependent on Nord Stream 1, the interruption of the pipeline might increase the cost of wholesale gas, which is what has caused the energy price cap to grow exponentially.

Germany’s gas reserves have increased from less than half in June to 84% full today as a result of the standoff with Russia, which has compelled countries to replenish their own gas supply.

As a result, although they have decreased during the previous week, global gas prices are still high by historical norms.

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EU agrees to cut gas use over Russia supply fears

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EU energy ministers have decided that countries will reduce their gas use if Russia stops supplying them. The EU countries have now agreed to a voluntary 15 percent between August and March after being locked in negotiations since the notion was floated last week.

The Czech Republic, which is currently in charge of rotating the EU chair, tweeted, “This was not a Mission Impossible!”. Documents obtained by the BBC, however, indicate that the agreement had been weakened and that certain nations may now request exemptions. The EU warned that Russia was “constantly using energy supplies as a weapon” and that the goal was to save money before winter.

If supplies run out, the voluntary agreement would become obligatory. The EU said that some nations, including Ireland, Malta, and Cyprus, which are not connected to the EU’s gas pipelines, would be exempt from any mandatory gas reduction orders since they would not be able to seek alternative supplies.

In order to reduce the possibility of a crisis in the supply of power, the Baltic nations, who are not connected to the European electricity grid and heavily rely on gas for electricity production, are also exempt from mandatory targets.

Initial calculations showed that even if all exemptions were used, the EU would still lower demand to a level “that would get us safely through an average winter,” according to Kadri Simson, European Commissioner for Energy.

She also discussed efforts to increase the supply of alternative gas from nations such as Azerbaijan, the United States, Canada, Norway, Egypt, and Israel.

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Germany accuses Russian gas giant Gazprom of inflating energy prices.

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Germany has accused Gazprom, the Russian state-owned gas company, of seeking to raise energy prices by drastically cutting supplies. Gazprom said it will limit gas exports to Germany to less than 70 million cubic metres per day, which is less than half the current rate.

It cited the need to service equipment in the Nord Stream pipeline as the reason. However, Germany’s economy minister, Robert Habeck, stated that it was a “political choice” rather than a technical one. “Clearly, it’s a plan to agitate the market and drive up prices.” On Tuesday, Gazprom said that the Nord Stream 1 gas flow would be reduced from 167 million to 100 million cubic metres per day, but on Wednesday, it was further reduced to 67 million cubic metres per day.

According to energy firm ENI, Gazprom cut its gas supplies to Italy by roughly 15% on Wednesday. Italy, like Germany, is significantly reliant on Russian gas, with 40 percent of its imports coming from Russia.

The action comes just two weeks after European Union leaders agreed to halt most Russian oil imports by the end of 2022 as retaliation for Moscow’s invasion of Ukraine.

After refusing a demand that “unfriendly countries” pay in Russian roubles, Russian natural gas supply to Poland, Bulgaria, Finland, Denmark, and the Netherlands were already halted.

The payment demand was interpreted as an attempt by Russia to bolster the rouble after it was battered by Western sanctions. Demand for roubles was projected to rise as foreign exchange demand increased, pushing up the currency’s value.

Mr. Habeck stated that Russia’s actions demonstrated that European countries must urgently eliminate their reliance on fossil fuels. Germany halted the construction of the Nord Stream 2 pipeline in February, just as Russia began its conflict in Ukraine. The minister said he would wait to see how the decision affected the European and German gas markets, but that suppliers had always been able to get gas elsewhere.

He added, “We don’t have a supply problem in Germany either.” “Gas will almost certainly be kept indefinitely.” In the last several days and weeks, we’ve made significant progress in this area.

“However, we’ll have to wait at least two or three days to obtain a complete picture of how things are progressing right now.”

On Wednesday, the EU and Israel and Egypt inked a framework deal aimed at increasing the amount of Israeli natural gas delivered to European countries.

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