Putin holds Europe responsible for the gas crisis but holds out his hand

The President of Russia, Vladimir Putin, blamed Europe for the gas crisis for its unpredictability when it comes to accumulating reserves, but extended his hand by stating that his country is willing to increase shipments to the Old Continent if it receives the corresponding request.

“We are prepared to address any additional steps,” said the head of the Kremlin in his speech at the plenary session of the forum “Russia Energy Week”.

He indicated that in the gas market, especially in Europe, “for now it is not balanced or predictable, and not everything depends on the producers, but to an equal or greater extent on the consumers themselves.”

The trigger for the crisis

The president stressed that the increase in natural gas prices in Europe, which this month exceeded US $ 116 per MwH in the Dutch spot market, is due to the electrical energy deficit caused by the fall in wind generation, and not the other way around, since many countries did not fill their gas tanks in a timely manner.

“Over the last ten years, systematic failures have been introduced step by step in the European energy system and this has caused a massive energy crisis,” said Putin, who recalled that when nuclear and gas generation occupied dominant positions in the energy basket there was no crisis.

He insisted that Russia “impeccably fulfills its contractual obligations” with its partners, including Europeans, to whom this year – he said – increased gas supplies by 15% and deliveries of liquefied natural gas by 13% ( LNG).

Maintain transit through Ukraine

Despite the tensions between Moscow and Kiev, the president assured that Russia is willing to maintain or even increase gas shipments to Europe through Ukraine beyond 2024, when current contracts expire.

But he stressed that this will depend on the volumes contracted by the European partners, since it is a purely economic matter.

However, he warned of the risks posed by the use of the Ukrainian gas pipeline system, which, he said, “has not been repaired in several decades.”

Ukraine fears that Moscow will stop using its gas pipeline once Nord Stream 2, which will transport Russian gas directly to Germany along the bottom of the Baltic Sea, is operational.

The transit of Russian gas through Ukrainian territory represents an income of US $ 2 billion per year for Kiev.

Long term contracts

Putin insisted that Russian companies do not benefit from high gas prices on the spot market, since they mostly operate on long-term contracts.

In this sense, he indicated that the Germans should “thank” their former Chancellor Gerhard Schröder, since by virtue of the gas contracts he signed with Russia, Germany “now pays US $ 300, and not US $ 1,500 for every thousand meters cubic ”of gas.

The Russian president warned that the plans of the European Union (EU) to impose a tax on carbon, which he described as an “instrument of unfair competition”, will cause an increase in prices like the one observed in recent weeks.

At the same time, he noted that Russia plans to achieve carbon neutrality by 2060.

Global mechanisms to balance the market

“We need to negotiate global mechanisms to balance the energy market. We need to launch a substantial dialogue between producers and consumers, free from any political prejudice and imposed clichés, ”Putin stressed.

Regarding the situation in the oil market, he considered it “possible” that the price of a barrel of oil could reach US $ 100, although he stressed that a significant rise in prices does not favor producers.

Putin noted that prices are rising, but that Russia and its partners in the OPEC + alliance “are doing everything possible to fully stabilize the oil market.”

The price of a barrel of Brent oil for delivery in December ended this Tuesday on the London futures market at US $ 83.41, 0.30% less than at the end of the previous session.

“We do not allow significant price increases. It is not in our interest. We fully comply with all our obligations in relation to production cuts, “he said.