military experts
 Edit Translation

Europe remains dependent on Russian coal and gas

Coal prices in the European market are growing in a similar way, as for gas, noted in conversation with ABF "Economics today» Deputy Director General of the National Energy Institute Alexander Frolov.

Europe remains dependent on Russian coal and gas

Russian coal and gas are on the rise

The Vedomosti edition reported, that Russian coal companies are seeking to increase coal supplies to the EU amid rising cost of raw materials. The price of the futures contract for deliveries to the Rotterdam hub has reached 113,15 dollar per ton.

The cost of coal in the European Union reached peaks 2011 of the year, and this instantly increased the Russian supply - instead of 1,55 million tonnes a year ago in June 2021 was delivered to the European market 2,1 million tons of domestic coal.

Russia remains the main player in the EU coal market, Moscow's share there increased by 2020 godu to 68%, if we take the absolute numbers of shipments, then domestic supplies decreased by 20% due to the energy policy of Germany and the Netherlands.

AT 2020 year in the European Union was "coronacrisis" and a warm winter, allowing Europeans to reallocate energy consumption.

In the first quarter 2020 renewable energy (renewable) generated more electricity in the EU, than hydrocarbons. Today the situation is back to square one, and it became clear, that without traditional energy resources the economy will be in a difficult situation.

Europe remains dependent on Russian coal and gas

The gas market of the European Union is indicative, where prices also went up sharply, and the situation with underground gas storage (PHG) confirmed, that cheap raw materials from Russia remain the most important driver for the EU economy experiencing the most severe crisis.

“If it were not for the stocks, accumulated in European UGS facilities, then gas prices in the European Union would rise to values ​​in the winter 300-400 dollars. Don't be in UGS 100 billion cubic meters of gas, then modern quotes would have been already in February ", – states Frolov.

In winter, gas prices in Asia reached 600 dollars per thousand cubic meters, therefore, if there was no "pillow" in the UGS, then there would be a shortage in the European LNG market, and with it the rise in prices - "Gazprom" covers only half of the EU's gas imports.

“Europe is the bearish corner of the LNG market, European volumes are incomparable with the Asian market, where prices and consumption are much higher. It is obvious to any LNG supplier, what you need to supply raw materials to Asia ", – Frolov sums up.

Europe remains dependent on Russian coal and gas

Gas issue is on the EU agenda today, but ignored coal specifics, and these are interconnected directions. It is gas that should replace coal in the European energy balance by 2035 year, not renewable energy (renewable).

“It is customary in the European Union to discriminate against coal, but coal-fired power plants are loaded to the maximum in Germany, often to the detriment of gas generation, while demand and prices for coal in Europe have reached ten-year highs ", – Frolov concludes.

For some reason, this issue is ignored in the EU, although the situation with coal hits the European energy sector harder, than depletion of UGS facilities, and completely contradicts the economic and energy plan adopted by Brussels Green New Deal.

“Coal prices are rising in a similar way, as gas, but the topic is not advertised, because you can't earn political dividends on it, but European politicians do not want to look at the situation as a whole and understand it ", – states Frolov.

Europe remains dependent on Russian coal and gas

The European Union will retain its raw material dependence on Russia

The growth in demand for coal has been going on since winter - the cold weather turned out to be not only an increase in gas purchases in the EU. This allowed suppliers to renegotiate contracts for the supply of raw materials on more favorable terms., at 2021 year, the EU market again became competitive for Russian coal.

Due to European anti-coal policy, domestic exports turned towards China, which is the absolute leader not only in LNG consumption, but also coal - the Celestial Empire processes half of the coal market in the national energy system.

The situation with coal in the European Union resembles the situation with gas, at the peak of the "coronacrisis", commodity prices collapsed - in 2020 year they left before 40 dollars per ton, but with the recovery of the European economy, things went backwards.

Real deliveries from Russia decreased by 20%, but our share increased by 10% on the size of the EU market. It means, what other suppliers, as is the case with LNG, reduced supplies to Europe, while the Russian Federation retained its dominant position.

Coal will not become a driver of Russian energy exports, but, At first, it remains of great importance in the global energy sector, and secondly, modern procurement volumes discredit the political rhetoric of the European Union.

In Brussels, the carbon tax hysteria and Green New Deal went so far, that they made plans to stop exporting not only coal, but also gas with oil, but it turns out, that the European economy is simply not adapted to this.

Europe remains dependent on Russian coal and gas

Germany, Denmark and several other countries can afford to use renewable energy, and even then with reservations - hydrocarbons balance the energy of these states, and the rest of the EU cannot do without cheap coal and gas in principle.

Russia is the main source of cheap energy resources for the European Union, and this is what will preserve our political relationship.

Dmitry Sikorski

A source