With winter approaching and a staggering jump in energy prices hitting Europe, Russian President Vladimir Putin has chosen the right moment to use his country’s leverage as an oil and gas superpower.
On a chaotic day, when European reference gas rose by 40% in a matter of minutes, Putin cut prices by offering to help stabilize the situation. According to him, Russia could potentially export record volumes of vital fuel to the continent this year.
According to Deputy Prime Minister Oleksandr Novak, rapid certification of the controversial Nord Stream-2 natural gas pipeline would be one way to achieve this.
Nord Stream 2 runs along the bottom of the Baltic Sea between Russia and Germany, but is linked by a long, complex and highly politicized permitting process. Although Putin himself did not directly link additional supplies to the pipeline’s assertion, he noted that another important route for Russian exports to Europe, Ukraine, was more expensive and polluted.
“Let’s think about a possible increase in supply in the market, but we need to do it carefully,” Putin said at a meeting on Wednesday, which was broadcast on television.
The energy crisis in Europe is hitting stock and bond markets, raising fears about inflation and threatening to damage major industries. The region’s governments are trying hard to respond, no more than hoping for a mild winter to soften the blow.
According to some European officials, one of the main reasons for the difficult situation was lower-than-expected supplies from Russia, the largest supplier in the region.
Putin stressed that the state-owned PJSC Gazprom had fulfilled all its supply contracts, and that his country did not want to see the “speculative madness” that is currently sweeping the markets.
“Russia has always been and remains a reliable supplier of gas to its consumers around the world – both in Asia and in Europe, and always fulfills all its commitments in full,” he said.
According to the company, Gazprom’s exports to Europe in the first nine months of the year were close to historical highs. According to Putin, if this pace is maintained until the end of 2021, it will be a record year.
Gazprom’s daily exports to Europe earlier this year were close to record highs, but fell in September amid rising domestic demand due to the early start of the heating season. The company is also continuing its campaign to store injections at home, which is scheduled to be completed by November 1.
Putin invited energy leaders to his government and suggested how to stabilize the energy market, and Nord Stream 2 was not the only proposal. Novak, a former energy minister and one of OPEC + ‘s architects, also offered to sell additional volumes on Gazprom’ s own electronic platform, located in St. Petersburg.
However, the fate of Nord Stream 2 is increasingly intertwined with the situation in Europe. The fall in Russian exports in September, which meant cuts in transit routes through Ukraine and Poland, drew criticism that the country was suspending supplies to speed up pipeline approval.
Putin said Gazprom would send more gas through Ukraine than was contracted this year. However, he also denied the country’s suitability as a transit route, saying Russia’s new pipeline systems under the Black and Baltic Seas, including Nord Stream 2, were more economical and environmentally friendly.
According to Putin, transporting large volumes of gas through Ukraine is “economically unprofitable for Gazprom because it is more expensive.” “Delivery through new pipeline systems that have been commissioned in recent years and are now being commissioned reduces CO2 emissions by 5.6 times.”
Putin said the current market crisis was the result of a faster economic recovery around the world, which “warmed up” energy demand. According to him, the unexpectedly long and cold winter has depleted gas reserves in Europe.