Mr Putin's Gas

What plans does Little Volodya have for his gas weapon?   (Methane, that is: large-scale chemical warfare doesn’t seem too likely right now.)  Gazprom’s great selling point has always been reliability – better, for example, than the Dutch, who in their heyday as an exporter would always interrupt external sales rather than deliveries to their own people.  With Russia it was the exact opposite: Russians could freeze in order to support hard currency sales.  Notwithstanding Putin has been holding back gas for many months now, he’s always met minimum contractual obligations and curiously, just today, westward flows of Russian gas are the highest they’ve been for several days.

“Suspending” Nord Stream 2, as the Germans have done, is virtue-signalling, but meaningless in practical terms:  they’ll un-suspend it at the first convenient juncture.  Ol’ Uncle Joe Biden said something at the weekend rather bellicose about NS2 but I kinda doubt he has in mind blowing it up, easy and rather satisfying though this would be (there’s a James Bond film involving a Russian gas pipeline, as I recall).

So: will Putin turn off the taps, as that long-running and rather prescient little graphic in the opening credits of HIGNFY has it?  More constructively, he may satisfy himself with the dramatic price hike that’s already happened, of course.  

One thing’s for sure, the Germans (and many others) are in absolutely no position to forgo that gas voluntarily, as we’ve noted here before.

Which leads us to consider a Big Accident.  If there’s too much high-explosive shit flying about in Ukraine, well, all that infrastructure is really quite fragile (although not too difficult to repair).  Quite a big chunk of Russian exports still transit Ukraine, albeit NS2 is designed to put paid to that.  Who knows what any number of rogue actors might think of doing in that very large country, in the fog of war?  There are plenty of people who could profit handsomely from a Big Accident …

“Short gas” may describe all our positions as consumers right now.  Won’t be many commodities traders short gas at the moment, though.

ND