Sunday, 24 October, 2021

Russia offers to ease Europe’s gas crisis

Russia offers to ease Europe’s gas crisis

MOSCOW: With winter fast approaching and a stunning energy price surge pummelling Europe, Russian President Vladimir Putin chose an opportune moment to use his country’s leverage as an oil and gas superpower.

On a chaotic day that saw European benchmark natural gas surge 40 per cent in a few minutes, Putin eased prices by offering to help stabilise the situation, report agencies.

Russia could potentially export record volumes of the vital fuel to the continent this year, he said. Dutch and UK gas futures plunged more than 7 per cent on his remarks after earlier hitting records, while US prices for the fuel dropped 10 per cent. But spot liquefied natural gas in Asia still soared to an all-time high. Quick certification of the controversial Nord Stream 2 natural gas pipeline would be one way to achieve this, according to Deputy Prime Minister Alexander Novak. Nord Stream 2 lies completed under the Baltic Sea between Russia and Germany, but is tied up in a long, complicated and highly politicised permitting process. While Putin himself didn’t directly link additional supplies to approval the pipeline, he noted that another major route for Russian exports to Europe, Ukraine, was more expensive and polluting.

“Let’s think through the potential increase of supply on the market, only we need to do it carefully,” Putin said at a televised meeting on Wednesday. In an interview with Bloomberg Television, US Secretary of State Antony Blinken said Wednesday that the recent turbulence in European gas prices only underscores the need to transition to more sustainable forms of energy, and said he hoped Russia wouldn’t use its supplies as a weapon.

Europe’s energy crisis is rippling though stock and bond markets, spurring inflation fears and threatening to cripple major industries. The region’s governments are struggling to respond, with little more than hopes for a mild winter to cushion the blow.

Lower-than-anticipated supplies from Russia, the region’s largest supplier, have been a major cause of the dire situation, according to some European officials. Putin emphasised that state-run Gazprom PJSC has fulfilled all of its supply contracts and his country has no desire to see the “speculative frenzy” that’s currently gripping markets.

“Russia has always been and is a reliable supplier of gas to its consumers all over the world - both to Asia and to Europe, and always fulfills all its obligations in full,” he said.

Exports from Gazprom PJSC to Europe in the first nine months of the year were close to all-time highs, according to the company. If that pace is sustained for the rest of 2021, it would be a record year, Putin said.

Gazprom’s daily exports to Europe were close to record volumes earlier this year, but they fell in September amid increased domestic demand due to an early start of the heating season. The company also continues its storage-injection campaign at home, which is scheduled to end by Nov 1.

Putin asked his government and energy executives for proposals on how to stabilise the energy market, and Nord Stream 2 wasn’t the only proposal.