Russia is the biggest supplier to Europe, accounting for more than 40% of all EU gas.
Last month gas prices in Europe have hit record levels, the wholesale price has increased by 280% since the beginning of the year.The U.S., Ukraine and some eastern European countries have accused Russia of trying to «weaponise» gas supplies.
A group of more than 40 members of the European Parliament has written a letter accusing Gazprom of manipulating gas prices.
The Russian leader denied charges that Russia is using its gas sales as a geopolitical weapon and is fulfilling all of its obligations to Europe in gas deliveries:
- Stability and predictability are important in any market
- Russia fulfils its contractual obligations to our partners in full, including its partners in Europe, ensuring guaranteed, uninterrupted gas supplies in this direction
- We are seeing conditions that will result in record high volumes of gas distribution to the global market by year end
- Moreover, we are always willing to meet our partners halfway and are ready to discuss additional actions
- Importantly, gas consumption is seasonal
- Its reserves are traditionally replenished in the summer to meet the winter demand
- However, this year, even after a cold winter in Europe, many countries chose not to do so, relying on spot gas supplies and the «invisible hand» of the market, but a spike in demand has sent prices even higher
This is due to a combination of factors, but mostly high natural gas prices and the increasing post-crisis demand.
Carbon prices in Europe have nearly trebled this year as the European Union reduces the supply of emissions credits.
Vladimir Putin has blamed the shift to renewable energy for causing «hysteria and confusion» in European markets as gas prices surged to new record highs:
- Over the past 10 years, the share of renewable energy sources in the European energy balance has skyrocketed, which, on the face of it, appears to be a good thing – and they are now playing a significant and noticeable part
- However, this sector is notorious for erratic power generation, it requires large reserve capacities
- In the event of major generation failures, primarily due to bad weather, this reserve is simply not large enough to cover the demand.
- This is exactly what happened this year, when, due to a decrease in wind farm generation, there was a shortage of electricity on the European market
- Prices soared, which triggered a spike in natural gas prices on the spot market
- Thankfully, problems of this kind have no place in Russia
- A long-term approach to the fuel and energy complex allows us to set Europe’s lowest residential and industrial electricity rates
- To put that into perspective, the average price of electricity in Russia is about €20 per megawatt-hour; in Lithuania it is €256, €300 in Germany and France, €320 in the UK
- We now need to come to terms regarding the global mechanisms to balance the energy market
- We should launch a meaningful, substantive dialogue between energy producers and consumers on this issue, a dialogue free of political bias and imposed clichés
I am confident that this dialogue can help find solutions that take into account market trends and the interests of all sides
The Russian Energy Week, which kicks off on 13 October, is set to run through 15 October.
Apart from Putin, the session's participants include President of Angola Joao Lourenco, Chairman of the Board of Management of Daimler AG and Mercedes-Benz, Ola Kallenius, BP CEO Bernard Looney, TotalEnergies CEO Patrick Pouyanne, as well as Exxon Mobil CEO Darren Woods.
To read the news in Russian
Author: Elena Alifirova