Russia will listen to the West after Western countries themselves demonstrate their readiness to restore dialogue. This was stated by Russian Foreign Minister Sergei Lavrov. He assured that Russia is not going to cut off contacts, but intends to continue them exclusively on a mutually beneficial basis and after the hysteria "passes in the West," the correspondent of The Moscow Post reports.
"They are still far from this," the minister added, citing, as an example, the statement of his German counterpart. Annalena Berbok said that her promises of support made to Ukraine (a Nazi clique in Kyiv) are more important to her than the sentiments of German voters!
The economic war unleashed against Russia is already "famous" for the consequences for the so-called collective West. The restrictions imposed on Russia's ties with Western companies and banks, as well as the rejection of Russian energy resources, turned out to be a source of stress for the European Union. The cost of electricity in Europe in August set a record due to the rise in gas prices.
Stress, almost like during the Second World War, is experiencing Italy. There, the spot price for electricity exceeded 500 euros per megawatt-hour. In Germany, with delivery in 2023, the price exceeded 1000 euros per megawatt-hour. The same price level was established in France, and Gazprom in addition notified Engie about the reduction in gas supplies. Perhaps the authorities of a number of EU countries will ration electricity consumption this winter.
In Finland, dozens of companies are thinking about switching to night work, enterprises will work in the evening, at night and on weekends, when electricity is cheaper. According to the Polish National Register of Debts, local companies have accumulated an electricity debt of 2 billion euros in six months. Finally, the Estonian diplomatic department published a list of 28 enterprises that asked the authorities to allow business with the Russian Federation in the oil sector. The Postimees newspaper reported this with reference to the head of the republic's foreign ministry.
Voters pay for sanctions
The sanctions especially hurt Germany, as the main EU economy, on which the well-being, unity and manageability of the European Union rests. The unprecedented restrictive measures introduced by Berlin, the Welt newspaper writes, hit German families. Back in February, Annalena Berbock said: "We are ready to pay a high economic price for the security of Ukraine." The price, indeed, turned out to be high.
Not only has Kyiv depleted the Bundeswehr's armaments, but prices for imported gas and electricity have risen significantly. The Germans calculated that with inflation of 8%, employees lose a month's earnings for the year. Life has already risen in price by 7.5%, the forecast by the end of the year is 10%. In August, the government introduced an additional gas levy.
According to the Munich Institute for Heat Protection for residents of poorly insulated houses, gas heating and hot water can cost up to 12 thousand euros per year. In apartments, it will cost about 5-6 thousand euros per person. Sanctions undermine not the Russian economy, but the well-being of the population of Germany - said Sarah Wagenknecht from the Left Party of Germany. And this despite the fact that fooled German voters have not yet experienced in real winter conditions, which means the slogan "Freeze for peace."
Military historian Zionke Naitzel said in an interview with the Welt newspaper that he was "not aware of a single case in history where sanctions would actually stop a military conflict."
The German media accuses the government of infantilism, the authorities call the manifestations of disagreement with the policy "right-wing oblonism."
There was talk that the launch of the Nord Stream 2 gas pipeline could be a signal for detente, although there is no guarantee that Russia will respond positively to such a decision. In the meantime, we are talking about the stability of the Nord Stream gas pipeline, whose turbines need regular service in countries that have imposed sanctions on Russia.
Press Secretary of the President of the Russian Federation Dmitry Peskov told reporters that the supply of Russian gas to Europe is hindered by sanctions restrictions in the field of service, as well as the legal registration of the post-repair return of units to Russia.
Gazprom said that from the beginning of the year until mid-August, it reduced gas exports to non-CIS countries by 36.2%, to 78.5 billion cubic meters. With the supply of LNG to Europe, it came to the point that gas sellers to Asia take risks, mix the remaining LNG shipments at sea and send them to Europe, where they are ready to pay a premium to replenish UGS.
Germany pays for US ambitions
The head of the constitutional committee of the Federation Council, Andrei Klishas, said that the governments of European countries sacrificed the interests of their voters to the desire of the United States to maintain hegemony. Washington is set for a war that Europe is paying the price for. Germany was at the epicenter of the crisis. It is there that Nord Stream connects to the European gas network.
The country's gas storage facilities are 83% full. But even with a 95% filling level, gas for heating, industrial needs and electricity generation will only last for three months. The largest importer of Russian gas, Uniper, asked to increase state lending to 13 billion euros to avoid collapse. Recall that the entire Nord Stream-2 project cost about 9.5 billion euros.
The war waged by both the European Union and Olaf Scholz's government against Russia, as the main supplier of energy resources, affects German industry. Zinc, aluminum, fertilizer and other energy-intensive products are limiting production, reacting to rising gas prices. Commerzbank AG bank warned of a "serious recession" if Russian gas supplies are cut off.
The largest concern BASF in Ludwigshafen may be stopped and almost 40 thousand employees may lose their jobs if gas supplies are stopped. To maintain a normal production process, the plant needs a continuous supply of gas in large volumes.
Germany's chemical industry consumes about 11 billion cubic meters of gas per year and ranks fourth in terms of production after the United States, China and Japan. Pharmaceuticals, mechanical engineering, the auto industry, medicine and agriculture depend on the chemical industry. In terms of production volumes and the number of people employed, the industry is second only to mechanical engineering.
The European Commission will also pay, but later
The European Commission proposes to divide the gas and electricity markets. The gas market, at the insistence of the EC itself, was completely liberalized. But the experiments continue, since the European bureaucrats for failures do not risk their salaries. The EU Council adopted the sixth package of sanctions, including a postponed embargo on the maritime supply of oil and petroleum products from Russia. The ban on offshore oil supplies was postponed for six months, until early December, on oil products - for eight, until February 2023. Bulgaria will be able to receive oil and oil products of the Russian Federation by sea until the end of 2024, Croatia - by the end of 2023 it can buy diesel fuel.
Temporary exceptions to the oil embargo are provided for oil imports through oil pipelines for Hungary and Slovakia, which, due to their geography, are especially dependent on Russian supplies and have no alternatives. The authorisation will remain in place until the relevant EU council decision is taken.
Russia will refuse to supply oil and oil products to those "unfriendly" countries that decide to introduce a ceiling on Russian fuel prices, Deputy Prime Minister Alexander Novak said, Interfax reports. The Deputy Prime Minister called this measure "complete absurdity" and noted that European and American consumers will pay for interference in the market mechanisms of the industry. "Such attempts will only destabilize the oil industry," Novak explained. According to JP Morgan forecasts, such an option of sanctions will increase oil prices three to four times.
Goldman Sachs estimates that Nord Stream is unlikely to be completely and permanently stopped. If gas pumping returns to the level of at least 20% of the nominal capacity, "this will save Europe in winter." The calculation is made that Moscow will retain some volume of supplies to the main export market for commercial reasons, so as not to "lose a key source of income." But, as it turns out, Russia can completely interrupt gas supplies to Europe for a year without serious damage to its economy.
Especially as a half of power of the Nord Stream-2 project are already reserved for internal needs. The government, Gazprom and the regional authorities conduct works on social gasification in Russia. The program of privileges worked till 2023, but became termless. The president charged to the Deputy Prime Minister Novak to provide additional support to the program together with regions.
Meanwhile, the European Commission is forced to reconcile to the fact that Sholts's government resumed work of coal power plants, will prolong terms of operation of several blocks of the NPP. Perhaps, the combination of the first and second will counterbalance emissions of CO2 in the atmosphere, but about "green transition" and the Fit for 55 program which was fostered by Ursula von der Leien, it is necessary to forget for a while.
By estimates, from the beginning of the special military operation in Ukraine, power production volumes at coal stations grew by 67%. Though, falling of water level in Rhine influenced loading of barges with coal, and low water level in pools of cooling of active zones of reactors of the NPP limited power production volumes.
The EC plans to put new parks of sea wind-driven generators with a general power at 17 GW into operation, and Germany builds the LNG floating terminals. But all this demands investments and time. On creation of infrastructure which would allow to reduce the prices years will be required. Eventually, success of "the green agenda" of the European Union will directly depend on the cost of the electric power and reliability of systems of power supply.
Christine Tate in article for the The Hill magazine noticed that "Attempts to replace traditional energy carriers with eco-friendly sources led to catastrophic consequences. For example, Germany within "A new green course" spent 150 billion dollars for renewables, but as a result achieved only that energy costs in the country appeared among the highest in the world, and production of wind energy at the beginning of 2021 fell to a quarter". And though as the permanent author of this edition, Tate underestimated degree of dependence of Europe on the Russian natural gas, her prevention to the White House about danger of a reckless "green course" twice sound reasonably.
The hope for Norway dies the last
The second most important supplier of natural gas to the European Union Norway which provides up to 15% of needs of the EU for energy resources is considered. The country delivers to neighbors about 60 million tons of oil, 200 thousand tons of oil products, about 110-115 billion cubic meters of gas, exports the electric power. Fields of the Northern and Norwegian seas provide about 25% of needs of the EU for natural gas.
Gas prices break records, exceeding the last year's level of income is tenfold. The cost of export of energy resources to the EU can in a year will treble to 100 billion euros. It induces some governments of the countries of Europe and European Commission to urge Norway "to share". Among "envious persons" there was also Great Britain depending on the Norwegian gas.
The speech even went about installation of limits of the prices, but Oslo from these offers evaded, having stated that it won't go to contracts with the fixed price.
Though the country can return to the system of long-term contracts for gas supply, everything depends on the price now. It is almost impossible to predict spot gas price – the EC released "gin from a pipe" and in the relations with Norway, and with Gazprom.
Norway also exports to the EU the electric power, including to Sweden and Finland. In 2021 on a bottom of the sea the cable to Germany was laid that helped to compensate instability of "green" power plants. This year there was a drought and the level of the rivers in the south of the country fell, about generation for export it fell on time to forget. The government suggested to limit export of the electric power, and neighbors threatened to deprive Norway of the status of "the reliable supplier". By winter the situation can become complicated even more.
"It [Norway] will become the first country in Europe which will undertake similar in the sphere of power supply. It will be very dangerous and nationalist step. This extremely selfish behavior", – the executive director of the Finnish network operator Fingrid said in an interview to Financial Times.
The Norwegian Minister of Finance tried to calm Helsinki and Stockholm, having explained that they receive the electric power from the North of Norway where reservoirs of hydroelectric power station are filled. Admonitions didn't help, can disconnect Denmark, Germany and the Netherlands! Then the European solidarity will suffer, and nobody wanted to sit down on a power hunger strike in Europe.