Gazprom’s declining capacity is due to several factors, including:
Sanctions: Gazprom has blamed sanctions for the reduction in gas production, citing the delay in the return of a gas turbine from maintenance in Canada by equipment supplier Siemens Energy[1].
Withholding supplies: Gazprom has declined to book extra capacity to ship more gas to Europe from January at auctions, indicating that it has no plans to supply more than its contractual volumes, at least via these two routes[2].
Infrastructure bottlenecks: Bottlenecks could reduce the ability to re-route gas within Europe because of insufficient import capacity or transmission constraints, leading to shortages of 15 percent to 40 percent of annual consumption in some countries in Central and Eastern Europe[3].
Loss of European gas pipeline markets: The loss of European gas pipeline markets has had a profound effect on Gazprom’s revenue stream[6].
In summary, Gazprom’s declining capacity is due to sanctions, withholding supplies, infrastructure bottlenecks, and the loss of European gas pipeline markets. Not because it is moving out of the natural gas industry willing, they are being forced to slash production because of sanctions.
So my conclusion: blowing up a pipeline and increasing the price of natural gas helps makes up the lost profits from sanctions.
Russia’s already pumping less than they have in decades and has been progressively cutting production. Odd way of making more money.
Pumping less why?
Cutting production why?
Gazprom’s declining capacity is due to several factors, including:
Sanctions: Gazprom has blamed sanctions for the reduction in gas production, citing the delay in the return of a gas turbine from maintenance in Canada by equipment supplier Siemens Energy[1].
Withholding supplies: Gazprom has declined to book extra capacity to ship more gas to Europe from January at auctions, indicating that it has no plans to supply more than its contractual volumes, at least via these two routes[2].
Infrastructure bottlenecks: Bottlenecks could reduce the ability to re-route gas within Europe because of insufficient import capacity or transmission constraints, leading to shortages of 15 percent to 40 percent of annual consumption in some countries in Central and Eastern Europe[3].
Loss of European gas pipeline markets: The loss of European gas pipeline markets has had a profound effect on Gazprom’s revenue stream[6].
In summary, Gazprom’s declining capacity is due to sanctions, withholding supplies, infrastructure bottlenecks, and the loss of European gas pipeline markets. Not because it is moving out of the natural gas industry willing, they are being forced to slash production because of sanctions.
So my conclusion: blowing up a pipeline and increasing the price of natural gas helps makes up the lost profits from sanctions.
Citations: [1] Exclusive: Russia’s Gazprom tells European buyers gas supply halt beyond its control https://www.reuters.com/business/energy/russias-gazprom-declares-force-majeure-gas-supplies-europe-2022-07-18/ [2] Russia keeps Europe waiting on new gas supplies - Reuters https://www.reuters.com/business/energy/gazprom-fails-book-more-gas-transit-europe-despite-kremlin-reassurance-2021-11-02/ [3] Russia to Cut Europe’s Gas Flow via Nord Stream to 20% - WSJ https://www.wsj.com/articles/nord-stream-gas-flows-to-drop-to-20-of-capacity-russias-gazprom-says-11658760473 [4] Energy Fact Sheet: Why does Russian oil and gas matter? – Analysis - IEA https://www.iea.org/articles/energy-fact-sheet-why-does-russian-oil-and-gas-matter [5] A 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas https://www.iea.org/reports/a-10-point-plan-to-reduce-the-european-unions-reliance-on-russian-natural-gas [6] Europe’s Not Buying: The Impact of Lost Gas Markets for Gazprom and Russia - RUSI https://www.rusi.org/explore-our-research/publications/commentary/europes-not-buying-impact-lost-gas-markets-gazprom-and-russia