The United States’ energy war unleashed against Russia, followed by the gas terrorism of sabotaging Russia’s gas pipelines to Europe, Nord Stream 1 and 2, is causing outright rejection of this adventurous policy on the part of the international community.
It is not only the citizens of Europe, having become hostages of the USA as a result of such activity, who have already realized that Washington is thereby trying, by means of sanctions and illegal actions, to simply take over the European gas market from Russia and establish its own rules and instruments of influence with its cowboylike policy. By doing so, it condemns the peoples of the EU and the European economy to collapse, infringing on the national rights of the free market.
The next stage of this policy was Washington’s pushing through its handmaidens Ursula von der Leyen, Josep Borrell and Charles Michel of new trade and economic adventures against Russia by introducing the so-called “gas and oil price caps” at which Europeans are further induced to buy Russian energy resources. At the same time, the US is trying to force Europe to move from a market economy to outright trade diktat, starting with the energy sector. By doing so it is attempting to repeat the Breton Woods adventure of 1944, but this time not only to tie the whole world to the American dollar, but also to impose American diktat on energy supply and sales at the oil and gas “price caps” determined by Washington and some of its closest allies. And, first, with regard to such supplies by Russia, and then by other oil and gas producing states from the Persian Gulf and Latin America.
In view of these “moves” by the collective West, not only Russia, but also other major energy producers have already voiced their strong negative attitude to such attempts aimed at changing global trade and economic market relations.
In particular, against the backdrop of the energy crisis in Europe being experienced due to the provocative policy of the USA and the aspirations of many European states to urgently find a replacement for the Russian gas in Qatar, which is much needed by the European economy, the emirate has clearly understood the negative consequences of Western diktat with the “price caps” in world trade. Against this backdrop, Qatar’s Minister of Energy Saad al-Kaabi, in an interview with a range of media, including Bloomberg in early November, distinctly explained to Europeans what such a policy would entail. He stressed that this interference in market relations violates the rules of competition and creates uncertainty about the volume of gas extraction. After all, no country can extract as much energy resources as any politician in France, Germany or the US wants at any given time. Extraction of energy resources is a complex technological process, planned for years in advance. And if Europe wants gas, it has to sign long-term contracts and pay a little more than Asia – those are the market conditions. If Europe wants to impose a “price cap”, there may be no gas at all, the previous contracts will be renegotiated and gas will go to other buyers.
Although the Qatari minister pointed out that existing contracts enable the emirate to take such action, Qatar has nevertheless promised not to divert gas supplies from European countries for the time being, clearly underlining its importance to the EU in the current climate. “We have the right to do whatever we want with our volumes,” al-Kaabi pointed out. He also stressed that such blatant interference in market relations violated the rules of fair competition and put investments in the oil and gas industry at risk. Furthermore he pointed to the role of competing importers who, in the West’s proposed option, would be able to intercept supplies destined for Europe at the price cap and resell them to other consumers. And such cases are well known, where buyers in Asia (e.g. China) are already reselling, using the current price differential, some of their LNG to European consumers, making a profit in the process.
The attempt to impose a “price cap” on energy resources is incomprehensible not only to Qatar, especially because of the existence of long-standing contracts signed a long time ago with very different terms. In the event that someone wants to change the price or pricing unilaterally, Gazprom and other energy suppliers can simply stop supplying their products to the European market.
By strongly opposing the West’s idea of a gas price ceiling, Qatar is not afraid of losing the European gas market if Europe allows the blatant violation of competition that it is discussing. Qatar is additionally encouraged by a recent IMF report warning Europe of the risk of facing record gas and electricity prices in 2023, even if it survives the coming winter. In any case, Europe will have to replenish its gas storage in the spring, and with limited supplies from Russia, this will inevitably bring the market back to record high gas prices. After all, it is well known that by mid-September Russian gas supplies to Europe had already fallen by 80% year-on-year, with them stopped entirely in Bulgaria, Denmark, Finland, Germany, Lithuania, the Netherlands and Poland. The rise in energy prices in recent months alone has increased the cost of living in Europe by at least 7% and this increase will continue. And the willingness of European states to make any concessions to LNG suppliers in order to prevent the European economy from finally collapsing and social unrest spreading across the continent will follow.
Under these circumstances, Qatar realizes that the LNG market will in the short term be a seller’s market where the supplier can dictate its terms. And this situation will last for at least the next three to five years until Europe can switch from receiving pipeline gas from Russia to supplies and regasification of LNG and build new storage and production capacities, which Europe clearly lacks today. This is why Qatar is now openly pushing for the most favorable terms for itself, demanding in particular a transition to long-term contracts.
However, it hardly makes sense to say that Qatar’s position is due to its growing warmth towards Russia of late. It is more likely that, by virtue of its attachment to the US not only with the largest US military bases in its territory, it continues Washington’s game of countering the European Union. After all, in the end, the White House, while expelling Russia from the European energy market, must have its own additional levers of control over Europe and its energy security in its hands. And Qatar in this regard could be an excellent “backup tool” for Washington today and in the future.
Vladimir Odintsov, political observer, exclusively for the online magazine “New Eastern Outlook.”