Putin promises gas for Europe struggling with soaring prices – POLITICO


Russian President Vladimir Putin on Wednesday pledged his country is ready to increase natural gas shipments to Europe at a time when the continent grapples with the political and economic impacts of soaring energy prices.

Russia is the EU’s biggest gas supplier, and Putin insisted he was fulfilling his contracts with European customers “flawlessly”, adding: “we are ready to… even increase” sales.

“We will increase as much as our partners ask us to. There is no refusal, none,” he said.

Although Russia has not broken any contracts, its European storage facilities have less gas than usual, which is contributing to the market turmoil.

Putin’s comments at Russia Energy Week in Moscow came on the same day the European Commission released a series of measures aimed at calming member countries’ outrage over soaring gas and electricity prices. .

The Commission’s response was largely a list of existing policy options that capitals can use to reduce their energy bills without violating EU law. Energy Commissioner Kadri Simson said the so-called ‘toolbox’ was Brussels’ answer to Europeans’ question: ‘Can I pay the next bill? How long will this last? What can be done? “

“The current situation is exceptional and the internal energy market has served us well over the past 20 years. But we have to be sure that it will continue to do so in the future, ”she said, adding:“ The only way to fully decouple gas from electricity is to stop using it for electricity. generate electricity. “

This was not enough for Spain, where the government is criticized for not having controlled prices.

Spain’s Minister for the Ecological Transition, Teresa Ribera, said the Commission’s toolbox “does not respond to the exceptional nature of the situation in which we find ourselves”.

The price compression is due to an unexpected sequence of events – a strong economic recovery from the COVID pandemic, a collapse in wind power production, an increase in global demand for natural gas, gas deliveries from Russia lower than expectations to fill depleted gas storage facilities, combined with a steady increase in prices on the EU Emissions Trading System. Natural gas prices in the EU are more than five times higher than a year ago, while electricity prices are more than twice as high.

“Rising global energy prices are a serious concern for the EU,” said Simson.

Economic impacts

The pain is felt across the continent. On Wednesday, Bohemia Energy, one of the Czech Republic‘s main energy suppliers, announced that it was ending the supply of gas and electricity to its customers.

“We have been forced to take this drastic step due to the extreme and continuing rise in energy prices in wholesale markets,” the company said.

Sidenor, one of Spain’s largest steelmakers, said on Monday it would shut its factory down for at least 20 days. “The exorbitant price of electricity has increased overall costs by 25%,” the company said, adding that it was now “impossible for Sidenor to maintain its current production rate.”

Ribera accused Brussels of not having “stemmed the bleeding that will affect the entire European economy if measures are not taken”.

Putin had a simple explanation for the EU’s problems: the move from the bloc to short-term gas contracts. The move is part of a long-term effort to make its gas market more liquid and also to reduce its dependence on Russian energy supplies. However, this made the EU more vulnerable to international price fluctuations.

“What is happening in the energy markets in Europe today is, to some extent, the result of short-sighted policy,” Putin said.

He called long-term contracts “good for both the supplier and the consumer”.

The Commission is under increasing pressure from member countries to explore the possibility of joint gas purchases – using the EU’s market power to achieve better deals. Although Simson pledged to explore the option of voluntary joint purchases of gas ahead of the December redesign of the bloc’s third energy package, there was no firm indication of how such a program would work.

“There will be work in progress on what exactly we will offer in our December package,” said Simson. “It is a fact that different Member States have different timetables for their long-term contracts, and they also have different storage capacities … We have to take this into account when we propose an upgrade of the gas package.”

With the EU increasingly desperate for energy price relief, Putin has taken the time to address some of the sensitive points in Russia’s energy relations with the bloc.

He warned that the pipelines currently carrying Russian gas through Ukraine to the EU are not able to carry much larger capacity, saying it would be “dangerous”.

“The gas transit system has not been fixed for decades. If we increase the pressure, the pipe is likely to burst. Europe will end up without this road at all,” he said.

Ukraine insists its pipelines are properly maintained and accuses Russia of trying to undermine gas transit to increase pressure on the EU and Germany to quickly approve the new Nord Stream 2 pipeline in order to quickly bring more gas to the European market. It will take at least four months for the pipeline to gain regulatory approval, and the Commission stressed that the pipeline must comply with the block’s competition and gas rules.

Putin has denied accusations that Russia is using its gas sales as a geopolitical weapon, calling them “just politically motivated gossip that has no basis.”

Despite the impact of high energy prices, Simson insisted there were no plans to reverse the bloc’s Green Deal, which aims to make the EU climate neutral by 2050.

“We are not facing an increase because of our climate policy,” she said. “Fossil fuel prices are skyrocketing. We need to speed up the green transition, not slow it down.”

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