Russia seen as holding E.U. gas hostage to approve Nord Stream 2

CNBC’s Brian Sullivan joins ‘Squawk Box’ to report on how Russian President Vladimir Putin is using the Yamal-Europe pipeline to push for the Nord Stream 2. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi…

Russia seen as holding E.U. gas hostage to approve Nord Stream 2

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CNBC’s Brian Sullivan joins ‘Squawk Box’ to report on how Russian President Vladimir Putin is using the Yamal-Europe pipeline to push for the Nord Stream 2. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Russia did not cause Europe’s energy crisis — but it didn’t help, and instead tried to benefit from the situation, according to Amos Hochstein, the U.S. State Department’s senior advisor for global energy security.

“It sure didn’t do anything that it could to alleviate [the energy crunch], and in fact, took advantage of it,” Hochstein told CNBC’s Hadley Gamble on Wednesday.

Russia chose not to send additional natural gas supplies to Europe for November despite saying it is ready to help, auction results in October showed.

Gas prices in Europe hit record highs in October on the back of surging demand, lower than usual inventories and limited supply.

Russia started pumping less gas to Europe in August, and some analysts suggested that the country was limiting its discretionary supply to support the case for the controversial Nord Stream 2 pipeline, which will bypass Ukraine and Poland to carry gas from Russia to Germany.

The pipeline is awaiting approval from German regulators, but has faced opposition for various reasons, including concerns that Nord Stream 2 is not in line with Europe’s climate goals.

On the geopolitical front, Washington fears that Nord Stream 2 will give Moscow too much power over Europe’s gas supplies. In 2020, around 43% of Europe’s gas imports came from Russia.

Meanwhile, Kyiv is afraid that Russia will bypass Ukraine and take gas revenue away.

Energy as a weapon?

U.S. Secretary of State Antony Blinken on Wednesday told reporters that the U.S. is watching “very carefully” to see if Russia is using energy as a political tool.

“Should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine, we are committed and Germany is committed to taking appropriate action,” he said.

Hochstein said Moscow has come close to weaponizing energy.

“They’ve come very close to the line of using it as a weapon by suggesting that if a political decision was taken in Germany … to certify the Nord Stream 2 pipeline, all of a sudden, gas would appear, and there would be plenty of gas from Russia for Europe,” Hochstein said.

Russian President Vladimir Putin has rejected claims that his country is weaponizing energy against Europe.

“Even during the hardest parts of the Cold War Russia regularly has fulfilled its contractual obligations and supplies gas to Europe,” Putin told CNBC in October.

Hochstein said references to contractual amounts are an “excuse” because those levels should be the “floor, not a ceiling” in terms of appropriate energy supply.

The fact that prices went up to historic highs means that there’s demand that’s not being met, and producers should bring on supply “above and beyond” contractual obligations to bring prices down, he said.

He added that Russia, as an energy supplier, has a responsibility to increase supply to help importers sustain normal economic activity so that GDP growth will not be affected by high oil or gas prices.

Russia cannot claim to be a “reliable supplier” but stick to delivering contractual levels only, he said.

They have not broken any laws, Hochstein acknowledged. But he said it seems that Moscow’s energy policy has been to “never let a good crisis go to waste.”

“Unfortunately, I think that that’s how they’ve been behaving,” he said.

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