Vladimir Putin has dismissed claims that Russia is weaponizing its supplies of natural gas to speed up Germany’s approval of the completed Nord Stream 2 pipeline and to destabilize European energy prices.
The Russian president has described the accusations as “politically motivated blather with nothing to support it”.
He believes that European governments are looking to blame Russia for the poor energy planning and worldwide shortfalls in supply, which he considers the primary factors in the “hysteria” engulfing European energy markets.
He also defined the Nord Stream 2 pipeline, which extends from Germany to the Baltic sea and is pending Germany’s certification, as a ‘purely commercial project’.
Speaking to CNBC International at a moderated panel for Russian Energy Week in Moscow, he said: “Higher gas prices in Europe are a consequence of a deficit of energy and not vice versa and that’s why we should not deal in blame shifting, this is what our partners are trying to do.”
He additionally announced that Russia is ready to provide more gas to Europe if necessary, noting that Gazprom has increased its natural gas supplies to Europe over the first nine months of the year by 15 percent.
He said: “We ensure guaranteed, uninterrupted gas deliveries to Europe. We have all the reasons to believe that by the end of this year we will reach record levels of gas deliveries to the global market.”
While gas supplies increased to near-record levels in the first seven months of the year, the volume of energy provided to external markets has since tumbled. The volume of gas provided last month was the lowest amount for September since 2016.
His comments follow the Kremlin’s defense of Russian energy giant Gazprom, which it believes is supplying natural gas to the continent at maximum levels under Gazprom’s existing contracts.
Kremlin spokesman Dmitry Peskov told reporters: “Nothing can be delivered beyond the contracts. How? For free? It is a matter of negotiating with Gazprom.”
Russia is the third-largest producer of fossil fuels globally and accounts for just over 40 percent of the EU’s gas imports every year, according to Eurostat.
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Russia is already the most dominant force in Europe’s gas market with almost 40% share. If it wanted to use gas supplies to the EU as a political weapon, it would have done so long time ago by stopping supplies to the EU long before Nord Stream 2 came on the scene. Moreover, it would have sent them to China instead.
In fact, it is the EU which has politicized energy to delay the start of operation of Nord Stream 2 gas pipeline incited by the United States, Poland and the Baltic States. Instead of creating obstacles in the face of Nord Stream 2 every step of the way, the EU should facilitate the start of its operations by issuing a temporary operational licence to enable it to bring 55 billion cubic metres (bcm) of additional Russian gas supplies under the Baltic Sea to Germany and the EU thus alleviating the EU’s energy crisis.
The EU wanted to dictate to Russia to send extra gas supplies via Ukraine but Gazprom wouldn’t agree to send beyond the 40 bcm it agreed to ship annually under a 5-year agreement signed in December 2020.
If the EU wants extra supplies, it has then to issue a temporary operational licence to Nord Stream 2. This a very fair deal.
However, because the EU misjudged the gas market and delayed filling its gas stores before the onset of winter, it wanted to shift the blame from itself to Russia.
Gazprom has fulfilled its contractual obligations to the EU and no one in Europe is disputing that. In fact Gazprom’s exports to the EU rose by 23% between January and July this year. These figures prove the absurdity of accusing Gazprom of supply shortage. If the EU misjudged the gas market and didn’t order more Russian gas, it can’t blame Gazprom for its misjudgement.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London