Former Texas oil regulator Ryan Sitton told Sputnik that Russia's Nord Stream 2 gas pipeline may help alleviate the energy crisis in Europe, but fully resolving the problem would take a dramatic shift in investment strategy in oil and gas developments in the region
WASHINGTON (Pakistan Point News / Sputnik - 28th October, 2021) Former Texas oil regulator Ryan Sitton told Sputnik that Russia's Nord Stream 2 gas pipeline may help alleviate the energy crisis in Europe, but fully resolving the problem would take a dramatic shift in investment strategy in oil and gas developments in the region.
"Individually, they do create additional market access, I think it will help, but in the end it's still overall a supply and demand problem," Sitton said regarding Nord Stream 2. "I don't know that any one pipeline or any one new facility is going to be able to swing that. You'll have to see sort of a shift in total investment strategy."
The Nord Stream 2 gas pipeline was completed on September 10 and will deliver gas from Russia to Germany via the Baltic Sea. The process of certifying Nord Stream 2 AG as the pipeline's independent operator is currently underway to ensure the project complies with the conditions of the February 12 EU Gas Directive.
The peak price of gas futures in Europe reached $1,937 per 1,000 cubic meters on October 6 and thereafter began to fall, but has recently remained steady at $1,000.
Sitton, a former commissioner with the Texas Railroad Commission, pointed out that Europe may arguably be in worse shape than the United States because their oil and gas operations have been tied up with a lack of investments in refineries or gas infrastructure.
"They (Europeans) buy a ton of natural gas from Russia... The Russians, you look at Gazprom and the Russian oil companies, these companies are probably making more money than any other companies in the world," Sitton said. "They literally are making more money than Amazon, than Walmart, than Apple, because they are selling their oil and gas to Europe at such a premium price."
Global energy use has been impacted by efforts to cut carbon emissions. The Biden administration has said it aims to have a carbon neutral US economy by 2050 and many other nations have pledged to take similar steps in the 2015 Paris Climate Agreement.
Nearly two years since the start of the coronavirus pandemic, pent-up demand due to governments' measures has created an oil supply crisis which has sent crude prices skyrocketing from below $49 per barrel at the end of last year to above $80 at present.
Sitton said he thinks the Organization of the Petroleum Exporting Countries (OPEC) refuses to increase oil production as a means to ease pandemic-induced inflation because they want to provide capital to develop oil reserves.
"They have been fairly consistent in this idea that $70 to $80 a barrel oil is a good market price... they feel like that's a price that around the world most people are willing to pay," Sitton added.
