Russia’s deputy prime minister said certification of the Nord Stream 2 submarine pipeline, which is awaiting clearance from the German regulator, could curb the spike in European gas prices.
Prices have risen sharply in response to a recovery in demand, especially from Asia, with low storage levels.
The price of Dutch wholesale gas for November, a European benchmark, has almost increased eightfold since the start of the year and hit a record high of over € 150 (£ 125) per megawatt hour (MWh) in the early hours from Wednesday. It then fell to € 114 at 3 p.m. GMT.
“I think there are two factors, which could cool the current situation somewhat. First of all, of course, this is certainly the fastest certification and clearance completion for gas supply via the completed Nord Stream 2, ”said Alexander Novak in a statement. meeting of government officials and heads of energy companies.
Nord Stream 2, which flows over the bed of the Baltic Sea from Russia to Germany, is awaiting certification from Germany, which could take a few months. The pipeline has met resistance from the United States, which says the project will increase Europe’s dependence on Russian energy.
Novak said an increase in gas sales on Gazprom’s electronic sales platform could also calm prices. In 2018, the Russian gas group set up ESP for gas sales to Europe in addition to existing long and medium-term contracts. It has suspended gas sales for delivery in 2022 since the end of August.
President Vladimir Putin, who chaired the meeting, endorsed the proposed increase, adding that Russia should meet its domestic gas needs first.
Novak said some speculative trading could also be behind the surge in gas prices, which he said does not reflect the fundamentals of supply and demand.
Igor Sechin, the head of the Russian state oil company Rosneft, asked Putin at the meeting for the right to export natural gas from Russia. State television did not broadcast Putin’s reaction to the request.
Putin told the meeting that Europe was wrong to reduce the share of long-term deals in natural gas trade in favor of the spot market, where prices have risen. “We discussed with the previous composition of the European Commission, and all its activity was aimed at phasing out so-called long-term contracts,” he said.
“It was aimed at the transition to the spot gas trade. And it turned out that it has become evident today that this practice is wrong.
Gazprom resisted the idea of going into spot trading in Europe, preferring long-term deals that sometimes last around 25 years.
Putin also reaffirmed that Russia is a reliable energy supplier for Europe, which could receive record Russian gas exports this year as Moscow increases its gas supplies, including through Ukraine, in response to the energy crisis and stands ready to stabilize the market.
He said the transit of Russian gas through Ukraine will exceed the volumes agreed under Gazprom’s contract with Kiev.
Earlier on Wednesday, Putin’s spokesman Dmitry Peskov said Russia had played no role in the gas price spike in Europe, following accusations by the International Energy Agency and by some in the European Parliament that Russia had not done enough to increase supplies.
” There are several reasons [behind the gas crisis] – the way the economy is recovering, the growth in demand for energy resources, as well as gas stores are not being filled, ”Peskov told reporters.
Putin also cited the economic recovery and cold weather in Europe, which led to a reduction in gas storage, as other reasons.
Peskov said Moscow was ready to discuss new long-term contracts for the sale of gas to European consumers and that Gazprom was fulfilling all of its obligations.