Gazprom May Boost Production Capacity For Long-Term Gas Deals

Russia’s gas giant Gazprom could increase production capacity if it sees higher demand for volumes under long-term supply contracts from Europe, Russian Deputy Prime Minister Alexander Novak said on Friday.

Speaking about Gazprom’s production facilities and deliveries to Europe in September, Novak told Russian news outlet Business FM that production capacity can’t just be magically raised.

“Of course, if Russia’s European partners increase orders and if the volumes in long-term contracts grow, I think that Gazprom will surely develop its production capacity,” Novak told Business FM in an interview on the sidelines of the Russian Energy Week.

Europe’s energy crisis is the result of very low gas inventories and policy mistakes, not low supply from Russia, said Novak, joining other Russian officials including President Vladimir Putin, who mocked on Thursday the suggestion that Russia was using gas as an economic weapon.

In the interview with Business FM, Novak also dismissed suggestions that Russia has been withholding supply to Europe to force the EU into accepting that the controversial Nord Stream 2 gas pipeline is and will be needed.

Some analysts and Members of the European Parliament have suggested that Russia has been deliberately withholding gas supply to the European market in recent weeks, exacerbating the gas crisis and pushing prices higher, possibly with the ultimate goal of pushing the European Union into admitting that it needs Nord Stream 2 to avoid a more severe crisis when the winter comes.

More than 40 members of the European Parliament from all political groups have reportedly urged the European Commission to launch an investigation into Gazprom over alleged market manipulation that could have contributed to the record-high natural gas prices in Europe. 

The European Commission is looking into complaints from some European Union (EU) member states that Russia isn’t sending more gas on top of the long-term contracted volumes, European Energy Commissioner Kadri Simson told Reuters last week.

The European Commission presented on Wednesday a toolbox for a coordinated approach to protect those most at risk in the immediate term, including by investigating “possible anti-competitive behaviour in the energy market.”

By Tsvetana Paraskova for Oilprice.com

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