Gazprom warned Europe of a supply halt while signing a deal with Iran.

Karah Rucker Anchor/Reporter

Gazprom warns Europe of potential supply halt, makes $40B deal with Iran

Jul 19, 2022

Karah Rucker Anchor/Reporter

By Karah Rucker (Anchor/Reporter), Ben Burke (Producer/Editor)

A day after Reuters reported Russian state gas monopoly Gazprom had warned customers in Europe of a potential halt in its oil supply, the company penned a $40 billion memorandum of understanding with an oil company in Iran. The deal with the National Iranian Oil Company (NIOC) was reported on by Iran’s oil ministry’s news agency SHANA.

Under the deal, Gazprom will help NIOC in the development of the Kish and North Pars gas fields and also six oil fields. Gazprom will also be involved in the completion of liquefied natural gas (LNG) projects and construction of gas export pipelines.

Tuesday’s deal was signed during an online ceremony by the CEOs of both companies. The ceremony came on the same day Vladimir Putin visited Iranian President Ebrahim Raisi.

The Iran deal comes less than a week after a Gazprom letter cited by Reuters in its report on a potential supply halt to customers in Europe was sent out. In the letter, Gazprom said it was retroactively declaring force majeure on supplies from June 14. Nord Stream 1, the key pipeline delivering Russian gas to Germany and beyond, is undergoing 10 days of annual maintenance scheduled to conclude on Thursday.

Given the impact of Gazprom announcing the uncertainty in gas supplies, Europe will need to look for more options for oil imports. One of those options could be the United States, as Treasury Secretary Janet Yellen has already voiced opposition to the war in Ukraine.

“Russia’s illegal war and the global energy shock that has followed underscores the need to protect ourselves from dependence on foreign oil that makes us vulnerable to the whims of authoritarians like Vladimir Putin,” Yellen said.

With Russia being one of the top oil exporters in the world, Yellen said this is where great economic impact can occur if the world turns to alternative oil supply out of Russia.

“We will also discuss our ongoing efforts to hold Russia to account for its brutal and illegal war against Ukraine, including by exploring a price cap on Russian oil to deprive Russia of oil revenues and to lower prices of oil for consumers,” Yellen said.

Reuters contributed to this report.

Karah Rucker: ALREADY IN A GROWING ENERGY CRISIS…EUROPE IS TEETERING ON THE VERGE OF RECESSION AFTER IT’S MAIN OIL SUPPLY COMPANY OUT OF RUSSIA HAS NOW SAID IT CANNOT GUARANTEE THEM GAS SUPPLIES.
EUROPE HAS STOOD BY UKRAINE AMID RUSSIA’S ONGOING WAR AND THIS IS JUST THE LATEST ESCALATION BETWEEN THE TWO COUNTRIES.

GAZPROM IS THE LARGEST OIL COMPANY IN THE WORLD…LOCATED IN RUSSIA.
EUROPE RECEIVED ABOUT 40 PERCENT OF THEIR GAS IMPORTS FROM RUSSIA BEFORE THE UKRAINE INVASION.
OFFICIALS HAVE BEEN SCRAMBLING TO FIND ALTERNATIVES.
IT’S A COSTLY PROCESS AND HARD TO ACHIEVE OVERNIGHT.
LEANING ON THE UNITED STATES COULD BE ONE OPTION…
AS THE U.S. TREASURY SECRETARY HAS ALREADY TAKEN A STANCE AGAINST RUSSIA’S EXPLOITATION OF OIL EXPORTS.Janet Yellen, U.S. Treasury Secretary:
Janet Yellen: “Russia’s illegal war and the global energy shock that has followed underscores the need to protect ourselves from dependence on foreign oil that makes us vulnerable to the whims of authoritarians like Vladimir Putin.”

Karah Rucker: AT THE SAME TIME AS GAZPROM ANNOUNCES IT’S LIMITED SUPPLY AVAILABLE FOR EUROPE…THEY HAVE SIGNED A DEAL WITH IRAN TODAY PROMISING ITS SUPPORT TO HELP GROW ENERGY PRODUCTION IN THAT REGION.