The thesis about need to reduce dependence of Europe on the Russian gas is not new. It was in the air back in 1999, when the common natural gas market began to be introduced in the European Union.

«Granting a real choice for all consumers of the EU», including by expansion of cross-border trade in natural gas which had to provide not only ephemeral «efficiency increase» and «growth of standards of service» but also a thing quite notable — competitiveness of the prices was a component of this process.
The thought of reduction of dependence on the Russian gas was made public 20 years ago — in 2002 when the Nabucco project started being developed. It was planned to finish construction in 2011. Not to be unfounded, we will give excerpt from the article «Independence Day of the European Gas» published in the Der Spiegel edition on July 13, 2009: «The purpose of the project [Nabucco] is supply of Europe with gas and that is especially important, reduction of dependence on Russia». Or here France24 writes on January 27, 2009: «The EU supports the Nabucco pipeline to refuse the Russian gas».
Yes, at the beginning of 2009 Europe was excited by the gas conflict between Kiev and Moscow. Therefore the audience was eager to learn about some routes which go by Russia and Ukraine. But it is impossible to explain an idea of the need to get rid of Russian gas to a wide audience only with a convenient information context. Regardless of Russian-Ukrainian relations, a stormy legislative thought worked in the European Union.
So, in January, 2007 the European Commission issued a number of messages in which importance of formation of domestic market of natural gas was emphasized. According to the European Commission, the rules existing at that time and measures of the state support did not provide a necessary basis for emergence of steadily functioning domestic market. At a meeting on March 8 and 9, 2007 the Council of Europe suggested the European Commission to develop the legislative initiatives providing further «harmonization of powers and strengthening of independence of national power regulators». Here the basis for the Third power package which was accepted in July, 2009 was created.

A package with directives and regulations

The Third power package included the Directive of rather general rules of domestic market of natural gas. The concept «safety of deliveries» is mentioned in it three ten times. For example, article 5 is called «Monitoring of safety of deliveries». And there it is told about need to watch balance of supply and demand in the national markets of the states of the European Union, to estimate the level of the expected future demand and available deliveries. Also it is required to consider the planned or additional capacities under construction, quality and level of maintenance of networks. The attention has to be paid to measures for a covering of peak demand and the solution of problems with shortage of one or several suppliers. All this sounds quite ironically in 2022.
To increase heat of irony, we will remind, on what expected basis the Third power package was formed. In the second half of the 2000s the European Union proceeded from the assumption that by 2030 demand for gas for its territories will increase by 300 billion cubic meters (more than to 800 billion cubic meters). Thus dependence on import of energy carriers had to grow. Of course, till 2030 still far, but, according to BP, demand for gas in Europe (without Turkey and Ukraine) from 2010 to 2021 was reduced from 532,5 billion cubic meters to 487,7 billion cubic meters. Internal production of natural gas thus was reduced from 290,7 billion cubic meters to 191,8 billion cubic meters. It is drop of almost 100 billion cubic meters.
In other words, if regarding growth of dependence on import of energy carriers forecasts in general were right, on key indicators they did not hit the mark even approximately (we doubt that by 2030 the situation with demand in Europe will sharply change). But the forecasts were aimed in the right direction. In our restless time it deserves praise.
But there is nothing to praise the European officials who developed the Third Energy Package. They not simply failed to guess the basic situation which formed the basis of all architecture of the gas market of Europe, they as if tried to hit the mark two steps away from themselves while this purpose was on other end of the continent. The European officials considered that Europe is the market of the buyer.
Certainly, we repeatedly concerned this subject. But the truth is not tarnished by repetition. The European officials made a mistake, having considered that it is enough to them to create rules of the game which will allow suppliers to compete conveniently with each other. After all the market of the buyer is a priori scary attractive to producers of energy resources, respectively, it is not necessary to fight for them. On the contrary, it is necessary to fight with them.
Do insidious suppliers own gas transmission infrastructureIt is unacceptable! You never know, a supplier from a third country suddenly appears who wants to sell very, very cheap gas to Europe, and the pipe is already occupied. It is disorder.
Or, for example, let’s talk about long-term contracts. Of course, provisions of the Third power package do not interfere with their conclusion. But it is necessary to check still, whether undermine long-term contracts of the purpose of the Gas directive. And in general, it is suspicious sort of business to conclude gas agreements for 10 years and more. Are you going to monopolize the market?
And, of course, it is necessary to fight very much against an oil binding, replacing it with a binding exchange. After all, very soon European trading floors will be overcrowded with gas suppliers who will begin to compete with each other, desperately knocking down prices. So the cost of gas under long-term contracts will fall.
Provisions of the Third power package were realized. But numerous suppliers did not hurry to fight for the European market. And the European exchanges were influenced more and more by the situation in Asian trading floors. Besides, the economy of Europe did not recover fully from crisis of the end of the 2000s. And the measures which were taking root for support of the power plants working at renewables beat on profitability of the most effective segment of gas power plants.
The EU appeared one of the large, but not so dominating regional markets. It considerably conceded on appeal to the Pacific Rim. Besides thanks to reforms in the field of energy industry Europe became one of the most vulnerable regions for blows of a world energy crisis.

Gas peak

The world energy crisis began in the middle of 2021. It was preceded by cold winter which swept out from the European underground gas storages 30 billion cubic meters bigger than in the previous year. The total value of selection made about 70 billion cubic meters. Completion of stocks stumbled about suddenly increased exchange quotations. Gas started rising in price uncontrollably.
Pressure of high prices had negative impact on increase in demand in the second half of the year 2021. From July till December, 2019 and 2020 gas power plants of the European Union made approximately on 264 TVT · h electric power. For the similar period of 2021 this indicator was reduced to 234 TVT · h. The industrial enterprises consuming a large amount of gas and/or the electric power started stopping working.
Nevertheless the reserve of the first six months 2021 was very great. It was enough to bring totals to very optimistic level. So, in 2019, according to BP, consumption of gas in Europe (without Turkey) made 482,8 billion cubic meters, in 2020 — 466,5 billion cubic meters and in 2021 — 487,7 billion cubic meters.
But already the first quarter 2022 showed recession — demand for gas in the EU was reduced by 7%. And it could not be explained with exclusively weather factor. Though it, certainly, introduced the amendments as the winter was much warmer than the preceding. But at the same time demand for gas generation as at the end of 2021 increased, as a part of coal and nuclear power plants was closed. For comparison: in the first half of 2019 gas generation made 222,8 TVT · h, in 2020 — 216,5 TVT · h, in 2021 — 230 TVT · h, in 2022 — 234,2 TVT · h.
Power plants became actually only significant consumer who showed increase in demand. The population began to save. And consumption from the industrial enterprises (25% of cumulative demand in the EU) fell off for the first quarter for 20%. Let’s emphasize — the first quarter. That is indicators of this period cannot be explained with opposition with Russia.
In the second quarter decline in demand for gas in Europe proceeded. So, in April and May, 2021, according to Bruegel taking into account statistics of ENTSOG, Eurostat and Energy-Charts, the European Union consumed about 64 billion cubic meters of gas, and for the similar period of the current year — 53,2 billion cubic meters. If falling proceeds and in the second half of the year, demand in the European Union, Great Britain and Norway can fall lower than the level of failure 2020 and make less than 440 billion cubic meters. That is there will be a reduction for 10-11% (approximately on 50 billion cubic meters).
For the first six months 2022 consumption of natural gas in Europe fell to 27 billion cubic meters. Export of Gazprom to foreign countries in six months 2022, on preliminary results, was also reduced — by 31% (on 31 billion cubic meters) — and made 68,9 billion cubic meters.
Thus for the first quarter LNG import grew by 79% in the EU. It was due to abnormal jump of quotations at the exchanges of the European Union. Thus average values of Asian platforms were lower than the European. Of course, periodically we observed the similar phenomenon. But on average ATR remained the bonus market with the highest and therefore attractive prices.
In a situation of such imbalance, uncharacteristic for the Euroasian gas supermarket, the volumes of the liquefied natural gas which are not held down by average and long-term contracts directed in the Old World. This inflow was imposed on the falling demand that narrowed a market niche for pipeline deliveries.
Perhaps, the price of the Russian gas became the most important factor. Thanks to persistence of the EU which was afraid of terrible influence of the Russian long-term contracts with oil binding on the fragile gas market of Europe, Gazprom substantially passed to an exchange binding. In the conditions of a world energy crisis it led to that the cost of the Russian pipeline gas at some point appeared above the current exchange quotations. Such a situation in the European market, in particular, was characteristic for May and the first half of June.
There is nothing surprising that in a combination of all these factors (the falling demand, a LNG overflow from the Asian direction and a difference in the prices) consumers tried to order gas from Russia in rather modest volumes. It is also possible to mention refusal of a number of buyers of use of the ruble scheme of payment. That is the reason of reduction of export deliveries was not in a position of the European politicians who played in sanctions opposition and the more so not in a wise advice of the International Power Agency (IPA).

IPA as a direct-sales representative

In March, 2022 the International power agency published manuals how «to reduce import of gas from Russia more than by a third» in the current year. This material could be ignored if not two circumstances. The first: it was written at the beginning of become aggravated political tension between Europe and Russia. The second: in this or that look these recommendations really are found in further variations of plans of the European guide to refusal of energy carriers from the Russian Federation. Also they are traced in public statements of the European politicians. Respectively, theses of IPA became some kind of base which it is necessary to examine.
Theses of the International Power Agency are a lineal heir of the basic principles of the Third power package and the European rhetoric which arose around concepts of «green» power transition.
To start IPA as a real direct-sales representative flogging a village simpleton from Kentucky medicine for everything in bright colours draws the bewitching future. The agency claims that if to adhere to the package of measures covering gas supply power industry and final consumption, demand for the Russian gas already in the current year can decrease more than by 50 billion cubic meters! That is more than on a third of the last year’s level of deliveries!

Contract as a problem

The first point can strike on the spot the incredible logicality: it is not necessary to sign new contracts with Gazprom. According to IPA, by the beginning of the next year expires the period of validity of contracts more than on 15 billion cubic meters a year. From ourselves we will notice that two thirds of this volume is occupied by the Polish company PGNiG which in May 2022 preferred buying the Russian gas not directly and via Germany having refused use of the ruble scheme of payment.
It is interesting as IPA motivates need to refuse new contracts with Gazprom. According to high quality specialists of agency, in the short term the European Union will have a window of opportunities for considerable diversification of supply of gas and signing of contracts with other suppliers. «A variety of deliveries» will increase if to refuse contracts with Gazprom.
There is an involuntary wish to ask: and who prevented to increase «a variety of deliveries» the last 13 years when provisions of the Third power package which just and had to promote growth of deliveries from alternative sources were implemented and reduce a share of Russia in the European market of gas? The question is not rhetorical. After all we face again the problem of existence of free resources and desire of the third countries to sell them to Europe.
In this sense the second point in which IPA advises the EU looks a little comically to replace the Russian deliveries with gas from alternative sources. It looks as if one point was divided into two as a result to receive beautiful number of wise recommendations — exactly 10 pieces. But it is here that the agency is trying to answer the question of where alternative supplies will come from.
For example, it considers that production in the European Union and import from Azerbaijan and Norway can increase during 2022 by 10 billion cubic meters.
Azerbaijan, of course, came to planned indicators of pumping along «The southern gas corridor». In this sense the forecast about growth of deliveries from this country can compete at competition of banalities with the statement that water is wet. But here the confidence in the potential of internal production surprises.
During the period from 2010 to 2021 this indicator (taking into account Norway) was reduced from 290,7 billion cubic meters to 191,8 billion cubic meters. If to take such a sign field as Groningen (Netherlands), from the 2010s production was reduced twice here — to 8,65 billion cubic meters a year. Besides originally it was planned to stop production on this field in the middle of 2022. Now, in the light of an energy crisis, it is expected that since October, 2022 Groningen will provide the inflow equal to 1,5 billion cubic meters in annual expression. And completely intend to stop production in 2023 or 2024. To tell that it is not enough this volume is to tell nothing.

LNG without long-term contracts

And, of course, LNG, according to IPA and the European together with it, it is only necessary to find the additional freights which are not held down by a certain destination. And in this European Union area as we stated above, succeeded but succeeded only at the expense of higher price than in Asia. And high prices beat on economy. Such a situation cannot proceed long. Especially in conditions when the European Union spoils universal statistics — actually only because of it recession of demand for gas is observed in the world, while ATR increases consumption. It means that at some point demand from Europe will fall adequately to stabilize the prices and to return to usual alignment of forces: Asia is the main market and the EU tails after it.
There is one more circumstance which obviously is in a conflict with promising plans for refusal of the Russian gas. In December of last year it became known of intention of the European Union to establish rigid terms for cancellation of long-term gas contracts. It was supposed to do it within transition to carbon-free power.
In what, actually, the problem consists, was perfectly formulated by the Head of Uniper Claus-Dieter Maubach at the E-world 2022 conference. He noted that creation of infrastructure for reception of LNG is not the biggest problem for Germany. The main problem is to find necessary volumes in the market. Maubach highlighted that projects on liquefied natural gas production, as a rule, start realizing only after the long-term contract consists. Suppliers prefer 20-year contracts.
The similar idea was introduced also by officials from other European countries: potential suppliers of LNG do not want to carry gas just like that: they want long-term contracts for 15‒20 years.
In this way the idea of the centralized gas purchases looks interesting. The European leaders were suddenly assured that if the countries (and the companies) will agree not separately, and all together, it decisively will strengthen negotiation positions of Europe. But in reality, if you are an intractable and scandalous buyer who does not want to take into account the interests of sellers, then whether you are a small company or the whole European Union, you will have difficult negotiations.
For example, in this situation it is impossible to convince someone to invest billions of dollars in the project without guarantees of return of these means what long-term contracts are.
One thing is good: The European Union obviously suspects that the current situation with flow of the liquefied natural gas will not last long. By the way, according to the forecast of the analytical company Capra Energy, import of LNG to Europe (including Great Britain and Turkey) in the second half of 2022 will decrease by 16% (on 13,8 billion cubic meters) in comparison with the first half of the year.

Overdue control

Further the International power agency suggested entering the minimum obligations for storage of gas «for increase of stability of the market». It is especially clear in this situation that recommendations of IPA are taken by the European Union leaders absolutely seriously. Council of the EU adopted on June 27 the resolution on filling of capacities of storage of gas to a heating season. According to this document, the European underground gas storages (UGS) by winter-2022/23 have to be filled not less than for 80%, and to the subsequent heating seasons — to 90%.
By the time of adoption of this resolution fullness of UGS in the European Union made 57,3%. Taking into account dynamics actual at that time achievement of a mark of 80% would require about 77 days.
However the underground storage is no more than means of regulation of streams of fuel in the conditions of seasonal unevenness of consumption, and also the tool providing stable supply of gas under force majeure circumstances. It is impossible to pump simply gas for the winter and to live only on these accumulations. Deliveries from the extracting companies are necessary.
Motion in the field of control of a stock rate in UGS is some kind of recognition of an inaccuracy of that strategy to which the EU adhered during previous years. Europe too counted upon a private initiative: the companies had to carry out socially useful function of accumulation of stocks, proceeding from own mercantile interests. In the summer of 2021 such approach turned back low dynamics of filling of storages.
By the way, it is possible to call strengthening of control of accumulation of stocks for the winter one of two really standing advice which gave to the European Union of IPA. The second is introduction of measures of protection of vulnerable consumers of the electric power from increase in prices consequences. True, it is not entirely clear what the energy supplies from Russia have to do with it. But we will leave these questions on which there cannot be an intelligible answer, and we will pass to less necessary councils.

Coal symbolism

Council about the accelerated expansion of new wind and solar projects and about maximizing power generation at the operating dispatched power plants «with the low level of emissions» can seem strange (the speech about the NPP and stations working at biofuel). According to IPA, it is possible to reduce demand for gas for 6 billion cubic meters, having received in the current year additional 35 TVT · h the «renewable» electric power (together with planned increase in production).
The problem here is in the prerequisite that inevitably conducts growth of rated capacity of solar and wind power stations to increase in production of the electric power. This thesis is relayed willingly also by the European heads. It seems to them clear and natural though it is deeply wrong. For example, the rated capacity of land wind farms of Germany grew from 2019 to the present moment from 53,19 GW to 56,93 GW. And here production for the first half of the year made: in 2019 — 53,6 TVT · h, in 2020 — 59,26 TVT · h, in 2021 — 45,62 TVT · h, in 2022-56,4 TVT · h. The output is poorly predictable.
Most likely, IPA and the European leaders suspect something like that. Therefore the agency out of the program advised to increase loading of coal power plants (though this process safely goes spontaneously from the middle of 2021). And, for example, Austria which among the first countries completely refused coal generation, in June, 2022 decided to return for a while to an era of coal and to reactivate power plant of Mellach in 200 km from Vienna.
It is reported that this station managed to stay not for long the center for researchers in the field of safe supply of hydrogen fuel in a power supply system. It is surprising symbolism.
On this background council «perfectly looks to make active efforts on diversification and decarbonization of sources for increase of flexibility of a power supply system». It allegedly has to weaken communication between supply of natural gas and energy security of Europe. Tellingly, leaders of the large European countries for the last months repeatedly spoke in favor of continuation of policy of decarbonization and declared as if any steps backwards on the way of «green» power transition it will not be made. It appeared that life introduces amendments even in the most principled stands. This thought can be illustrated with words of the special representative of the Czech Republic concerning energy security: «If disconnect gas this winter, we will burn everything that we will be able to warm our people and to develop electricity». Looking at the European economy, it is necessary to believe that they will really burn.

Couple degrees less

We will finish our review of measures which are recommended to the European Union and which it started realizing, with the most inconsistent part. It contains recommendations to accelerate increase of energy efficiency in buildings and the industry, and also — to promote replacement of gas coppers with thermal pumps.
Energy efficiency is great. Especially when it comes to reducing fuel costs for generating a kilowatt-hour of electricity or upgrading buildings.
But similar measures will not give strong effect here and now, at best — by 2030. And the effect is seemingly necessary already today. And here the look falls on average consumer who is started to be asked «to adjust temporarily the thermostat». Allegedly reduction of temperature for heating of buildings on only 1 °C will reduce gas consumption approximately by 10 billion cubic meters a year. Why on 10 billion cubic meters? Probably, the number is very beautiful.
The thought of economy of gas due to decrease in temperature was extremely clear not only to simple consumers who already save without any councils but also to politicians. For example, the head of European Commission Ursula von der Leien, having obviously inspired by calculations of IPA, declared that it is worth reducing heating temperature by two degrees on average across Europe or to moderate settings of the conditioner — as the EU will be able to refuse deliveries on Nord Stream. The Minister of Agriculture of the federal Land of Baden-Württemberg Peter Hauk urged to block Russia gas and oil cranes. «15 degrees can be survived in a sweater, nobody will die», — the official declared. By the way, the Federal network agency of Germany supported the idea about decrease in the minimum temperature of heating in houses to save gas. It is offered to allow during the winter period decrease in temperature to 18 degrees in the afternoon and 16 — at night (now the admissible minimum range of 20-22 degrees).
The Minister of Agriculture advised Germans to refuse meat (it «would be a contribution to fight against mister Putin»).  His no less creative colleague, German Economy Minister Robert Habek, did not stand aside either.
He advised Germans to heat less rooms, to draw curtains to keep heat and the most important — to change from the car on the bicycle.
And after all these pieces of advice of space scale are distributed not by outcasts but the people holding more than important posts. IPA, in turn, continues to provide them with conceptual recommendations. So, it published the report Playing My Part which is a result of cooperation with European Commission. In this report «a number of simple steps» which citizens of the EU can undertake for economy of energy were built.
In brief the people are advised to heat rooms less and to cool them by means of the conditioner less, thus it is necessary to stay at home. It is desirable to work from home too. And if it is decided to use a car, it is necessary to go slowly and surely with fellow travelers. But it is better to go on foot. If you really, really need to go, use a bicycle or public transport. Give up flights on airplanes, transfer to trains — please Greta Thunberg. No less delightful are the recommendations to reduce oil demand.

The cognitive dissonance

Also as it is known, it is impossible to tell that all pieces of advice do not make sense. If circumstances allow, walk on foot will be more useful both for you and for environment than a trip by car. Public transport is a huge benefit which simplifies transportations of a large number of people, minimizing loading of roads and fuel consumption and together with it the volume of harmful emissions. If you can work from home, why not to do it? The problem is not that advice of IPA and EC are silly (though there are also such). The problem is that they are not advice.
The International Power Agency, European Commission and the European leaders only pretend that the population makes reasonable decisions on self-restriction. And after all the majority of advice call anyway for rigid self-restriction.
One involuntarily recalls an experience that many years ago was carried out in the USA. Its essence was that a quantity of people was suggested to save within a month on calls by a home telephone number in exchange for reward which they will earn after the experiment. Possibilities of economy of natural resources, etc. were allegedly studied. The diligently limited themselves, did not use the phone much, but after the end of the experiment, they apologized to them, as it was intended, and said that the company had exceeded the budget and this particular participant did not have enough remuneration.
From this point the body of this experiment began. The participants continued to follow. Also it was found out that the majority of them continued to save on phone, having convinced themselves that earlier they did it not for the sake of remuneration and out of responsibility. The phenomenon of a cognitive dissonance was studied so.
At the very beginning of this article we found out that the European consumers (including the industry) already save. Involuntarily there is an impression that the European leaders played in the game «you cannot win-head». In this case suggest to present to Europeans that they save light, gas and fuel not because of an increase in prices and decrease in own income but because they are responsible citizens. And existence of wise recommendations about this occasion as if relieves a part of responsibility from the EU leaders for inability to cope with crisis consequences.

Save, save and save

Consumption of energy resources in the EU is reduced under pressure of economic difficulties. It turns out surprising: the forecast of a collapse of demand for gas coincides with the forecast of IPA about effect of economy — if all follow wise recommendations of agency — about 50 billion cubic meters in 2022. We believe, it after all no more than remarkable coincidence.
At the moment the authorities of the European Union continue to imitate fight against an energy crisis, giving out for it sanctions fight against Russia. The idea of a ceiling of the prices of the Russian gas was launched. Can it bring Europeans desired results? Yes. But only in case it is not realized in the form of a stuffing of the next sanctions package if the idea becomes a subject of negotiations.
As practice, Russia is a pragmatic and reasonable supplier who is capable to estimate negative strategic consequences of high prices of energy carriers for buyers. That is the buyer cannot simply establish the price (differently he risks to remain without goods). The buyer can ask to increase a share of contracts with an oil binding. By the way, the Serbian authorities do not get tired of rejoicing that, thanks to such a contract, they manage to pay less for gas.
The attempts to dictate the inflexible will, independently quoting the prices, absolutely will definitely not lead the European buyers to anything good. And average citizens will pay for unreasoned actions of the EU leaders, for miscalculations in power strategy, for lack of tools for fight against crisis, for pan-European fraud. And without any advice of MEA, EC and the other wise organizations they will save, save and save. But if this continues further, Europe as a significant energy importer on the world market will cease to exist.