Russian Retaliation Begins: Gazprom "Limiting EU Gas", Cuts Poland Supplies By 24% In Past Two Days11/09/2014 20:53
Source: Zero Hedge
Over the weekend, we commented that in response to Europe's latest, and most serious, sanction round which would finally impact Russian energy giants Rosenft, Gazprom Neft (but not Gazprom) and Transneft, "suddenly the stakes for Russia, and thus Europe, just got all too real, as Putin will now have no choice but to really ramp up the retaliatory escalation, which following the food ban can only mean one thing: a staggered reduction in gas flow to Europe."
And while Europe appears to have blown its load prematurely, with the sanctions leaked before Europe actually has the consensus to implement them (it is now a daily threat by Europe which is screaming that it will impose the sanctions any minute yet not actually doing so), Russia has no such moral quandaries and three days following our forecast, here comes Gazprom confirming once again that it is perfectly happy to play the "mutual defection" strategy in the ongoing and ever escalating game theory between Europe and Russia for one simple reason: it has all the leverage.
- RUSSIA LIMITING EU GAS TO RESTRICT REVERSE SUPPLY TO UKRAINE
In other words, this is only the beginning as Ukraine has clearly made the case that it will plug its gas reserve gap using "reverese flow" of Russian gas in transit to Europe. More importantly, this follows news earlier today from Poland’s PGNiG which said Gazprom lowered supply by 20%-24% in past 2 days.
So is this the beginning of the quite literal, ahead of the winter, European cold war? It looks like it, although for now it is all covered up in diplomacy with Bloomberg reporting that the Russian exporter "set volumes of daily natgas deliveries to Poland at level of end of last week due to preparations for heating season in Russia, Gazprom official says by phone, asking not to be identified in line with corporate policy." That, and conveniently Gazprom decided to "carry out some maintenance work at its pipeline system in Russia." Some maintenance work which suddenly saw Poland, which is 80% reliant on Russian gas, receive up to a quarter less Russian gas...
Finally, Gazprom noted that it also has to pump additional 7.3bcm of fuel to local underground inventories for winter in next month.
To be sure, Poland refused to tip its cards, and quickly commented that it won’t be hurt "as its underground storage is full", as was to be expected simply to avoid giving Russia all the leverage, something we also explained previously, when we observed in "Here Is Why Europe Just Launched The "Nuclear Option" Against Russia" that the Europe's 2014 winter war will be between the amount of gas held in European reserves, and how long Russian companies can go without obtaining European funding.
Then again, and once again confirming it is all about leverage, and who has it, Gazeta.ru reports that it took Poland just hours to halt its reverse flow to Ukraine:
Poland has suspended gas supplies to Ukraine in reverse flow. This was stated by the head of the company "Ukrtransgaz" Igor Prokop'ev, reports RIA "Novosti."
"Not everything is so simple. Today, Russia has begun to limit the supply of gas to the Republic of Poland to thwart reverse with Poland, we learn. At two o'clock in Poland ceased to reverse the Ukraine within the 4 million cubic meters ", - he explained the situation.
Earlier Polish PGNiG reported about the reduction of Russian gas supplies by 24%.
Gazprom’s press service declines to provide immediate comments, although none is needed after taking a quick look at the European dependence on Russia gas map conveniently placed below.