Oxford researcher in Arab: this is how the cycle of “surge and stagnation” caused the gas crisis

Jonathan Stern, distinguished gas researcher at the Oxford Institute for Energy Studies, said the natural gas crisis Europe is currently experiencing is caused by the Corona pandemic.

In his interview with Al-Arabiya, he added that the cycle of “revival and stagnation”, which initially led to a severe recession and then a strong recovery, was the cause of the current crisis.

He continued: “We have various factors that have combined to form a perfect storm. Of course, the cold winter we experienced last year did not help us, as this led to a decrease in our gas stocks more than expected. . Therefore, all of these things led to an exceptional situation. “

He explained that the Russian situation is complicated and the Nord Stream 2 pipeline is part of this complexity.

He continued: “Years ago, I worked for five years as an EU spokesperson on the European-Russian gas advisory council. At that time, the Russians repeatedly asked us not to shift the gas market to what it is today. a system based on immediate delivery and spot prices. “

The Russians are fully convinced that the best way to trade gas is through long-term contracts linked to oil prices. That’s what we told the Russians in that moment was: we don’t want to move to a spot market for gas.

He explained that the spot gas prices in Europe over the past decade, until the beginning of questyear, were overall lower than oil-related gas prices. Even in the last year of 2020, for almost the whole year, spot gas prices were four to six times lower than oil-related gas prices.

Spot prices today are two to four times higher. So Nord Stream 2 is in able to change this reality? I do not believe. Because if he will enter in function, this line will carry the same gas that currently fills the pipelines in transit in Russia Al-Bayda, Poland and Ukraine. The Russians in the past three or four months have had no further quantities of gas to sell to Europe. Because they went through the same harsh winter we experienced late last year and early last year quest’year. So their stocks also became almost empty. This is what prompted them to rebuild them. This process is expected to be completed by the end of this month, “according to Stern.

He explained that it is very easy to blame Russia and say that it is the reason behind everything that is happening, but Russia did not invent this market system for gas. We in We created Europe and as a result have enjoyed low gas prices for long periods of time. Unfortunately, today we are also suffering from high gas prices as a result.

He continued: “Algeria has said that if a new agreement on the” Maghreb-European “pipeline is not reached by the end of this month, it will be able to supply Spain and Portugal with the same previous quantities using the other pipeline:” Med Gas “.

gas scenarios

He stressed that if high gas prices persist, gas will become expensive and uncompetitive in many regions of Europe. Other more polluting fuels will become more competitive in Terms of costs. The gas will be replaced.

Read More About: Business News

Leave a Reply