Russia says Nord Stream 2 clearance could cool gas prices in Europe

Russian President Vladimir Putin attends a meeting with members of the government via video link at the Novo-Ogaryovo state residence outside Moscow, Russia on October 5, 2021. Sputnik / Alexei Druzhinin / Kremlin via REUTERS

  • Russia awaits authorization for Nord Stream 2 from Germany
  • Gas prices in Europe at their highest
  • Kremlin says Russia played no role in Europe gas crisis
  • Putin says Europe made a mistake by abandoning long-term gas deals

MOSCOW, Oct. 6 (Reuters) – Russian Deputy Prime Minister Alexander Novak said on Wednesday that certification of the Nord Stream 2 submarine pipeline, which is awaiting clearance from a German regulator, could curb soaring gas prices European.

Prices have skyrocketed in response to a pickup in demand, especially from Asia, when storage levels are low.

The European Dutch wholesale gas benchmark for November has almost increased eightfold since the start of the year and hit a record high of over 150 euros per megawatt hour (MWh) in the early hours of Wednesday.

It reversed its gains and fell to 114 euros around 3:00 p.m. GMT.

“I think there are two factors that might calm the current situation somewhat. First, of course, this is definitely the fastest certification completion and clearance for the gas supply via Nord Stream 2 completed, ”Novak told a 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. Gazprom implemented in 2018 the 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, boss of oil giant Rosneft (ROSN.MM), 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.

LONG TERM OFFERS

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 have 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.

“This was aimed at the transition to the spot gas trade. And it has become evident today that this practice is wrong.”

Russian gas group Gazprom (GAZP.MM) has refused to move towards spot trading in Europe, preferring long-term deals, which sometimes last around 25 years.

Putin also reiterated that Russia is a reliable energy supplier for Europe, which could record 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 Russian gas transit through Ukraine is expected to exceed the volumes agreed under Gazprom’s contract with Kiev.

KREMLIN’S DISCLAIMER

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 ( IEA) and some in the European Parliament that Russia had not done enough to increase supplies to Europe. Read more

“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. during a daily conference call.

Putin also cited the economic recovery and cold weather in Europe, which has led to reduced gas storage as another reason for soaring gas prices.

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.

Reporting by Vladimir Soldatkin and Gleb Stolyarov; edited by Catherine Evans, Jason Neely, Jane Merriman and Barbara Lewis

Our standards: Thomson Reuters Trust Principles.

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