Putin explained the reasons for rising gas prices in Europe

Gazprom is not booking the transit capacity of the Yamal-Europe gas pipeline due to the lack of applications for gas from European consumers. This was stated by Russian President Vladimir Putin at the final press conference on December 23. “Because he (” Gazprom “-” Vedomosti “) did not book this traffic, because those of his contractors and companies, and above all, the German and French, who buy gas on this route, did not apply for the purchase. What to transit if there are no purchase orders? ” Putin was indignant.

For the third day in a row, Gazprom has not booked gas pumping in Poland through the Yamal-Europe gas pipeline (annual capacity – 33 billion cubic meters), Interfax reports citing the GSA Platform. The company last booked capacity on Sunday to Monday. Due to the lack of supplies from Russia, the pipeline began to operate on the reverse, from west to east. As of January 2022, Gazprom had reserved only 19.26 million cubic meters for pumping through Poland. m of gas per day from the proposed 8.91 million cubic meters. m, and refused to buy additional transit through Ukraine.

Gazprom stressed that deliveries on the Yamal-Europe gas pipeline are carried out in accordance with consumer requests, and the company fulfills its obligations in full.

The President also called Russia the only gas supplier that has increased sales to Europe. According to him, in Germany, where 50-51 billion cubic meters are supplied. m of gas, “per year” supplied “plus 56 billion cubic meters. m – more than 10%. Putin also mentioned that instead of Europe, American gas was transferred to the premium markets of Europe and Asia.

But the president also spoke about speculation on Russian gas. According to him, the contractors, “having received 5.6 billion (cubic meters) more than provided by long-term contracts, are now selling it.” According to Putin, gas goes from Germany to Poland. “I have every reason to believe that this gas will end up in Ukraine,” he said. “We supply gas to Germany under long-term contracts, and the price is three, four, six or seven times cheaper than on the spot. Even reselling 1 billion cubic meters. m of gas, you can earn almost $ 1 billion, “- said the president.

Putin suggested “instead of serving in Poland and then in Ukraine, trying to support someone’s pants there,” to pursue further supplies to Europe. This, he said, will affect the price in the spot market: “The more product on the market, the lower the price.”

Spot gas prices in Europe have risen sharply since the summer and show extreme volatility. After a record rise on December 21, when they surpassed the $ 2,000 per 1,000 cubic meter mark for the first time in history. m, the market has cooled slightly. According to the ICE exchange on December 23, in the afternoon at the TTF hub in the Netherlands, the price of January futures fell to $ 1720 per 1,000 cubic meters. m.

The other day gas prices in Europe surpassed quotations in Asia. According to Platts and “Vedomosti”, December 22, 1,000 cubic meters. m of gas on Asian hubs cost about $ 1650. Thus, for a long time the Asian “prize”, which remained, changed to European. This forced several large gas tankers in the middle of the route to change course and go to the EU (“Vedomosti” wrote in detail about it on December 23).

High gas prices in Europe are maintained against the background of a record low level of energy pumping into underground gas storage facilities (underground storage facilities). According to Gas Infrastructure Europe (GIE), on December 21, European storage facilities were filled by 58% (63.17 billion cubic meters), while last year at the same time in storage were 85.36 billion cubic meters.

Gas pumping is the embodiment of contractual obligations of system users, said Deputy Director General of the National Energy Security Fund Alexei Grivach. Volatility of prices, according to the expert, is a consequence of the overall balance of supply and demand in the market and perceptions of traders about how this balance will develop in the future. “The problem is not in low transportation, but in the fact that the European market was not provided with the necessary set of firm commitments on gas supplies,” said the expert.

Amid the escalation of the energy crisis, the head of “Naftogaz Ukraine” Yuri Vitrenko said on Thursday that Kiev will insist on US sanctions against the pipeline “Nord Stream – 2”. On December 21, the company complained to the European Commission about Gazprom’s abuse of a dominant position in the European gas market. Naftogaz claims that Gazprom has deliberately sharply reduced sales on the spot market and is limiting other companies’ ability to supply additional gas to Europe.

In particular, Naftogaz pointed to the recent decision of the Russian holding not to increase gas transit to the EU through Ukraine and the termination of trading on Gazprom’s electronic trading platform. In addition, the Ukrainian side accuses Gazprom of blocking the export of gas produced in Russia by private companies, as well as the transit of raw materials to Europe from Central Asia.

In September 2021, some members of the European Parliament also asked the European Commission to investigate possible market manipulation by Gazprom.

Against the background of frosts and the lack of real opportunities to increase gas exports to Europe, any news reports cause significant fluctuations in spot quotes, said managing partner of WMT Consult Ekaterina Kosarova. “For the first time we are in a situation where the market reacts sharply to even the slightest fluctuations and news in the market, especially given the situation with Nord Stream – 2,” she said. The expert stressed that the current price level does not reflect the real balance of supply and demand, but due to speculative factors.

“For the first time we are in a situation where the market reacts sharply to even the slightest fluctuations and news in the market, especially given the situation with Nord Stream – 2,” she said. The expert stressed that the current price level does not reflect the real balance of supply and demand, but due to speculative factors.

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