Russian President Vladimir Putin has delivered a clear message to gas-strapped European governments, warning them that Russia will not supply extra unless they sign more long-term gas supply contracts and remove “administrative barriers”.
During a heated two-hour long session at the Russian Energy Week conference in Moscow this week, Putin criticised and mocked European efforts to switch away from fossil fuels and nuclear energy to decarbonised and renewable energy sources.
“Do you want Russia to boost gas supplies to Europe or not?” Putin asked, referring to pronouncements that the continent will soon reduce its purchases of natural gas as solar and wind generation increases.
He said Russian state-owned gas monopoly Gazprom had already increased gas exports to Europe by 10% between January and September this year compared to 2020, with Russian supplies of liquefied natural gas to the region also up by 13% during this period.
However, to produce and export more gas, Russia “needs to extract it”, and to do that, Gazprom needs to be sure it will be able to market this additional gas in Europe, said Putin.
Putin said that besides the uncertainty that European authorities have created for the future of long-term Russian gas exports, they have been erecting “administrative barriers” preventing the full use of the Gazprom-led Nord Stream 2 pipeline.
Nord Stream 2 was completed in September and is due to carry 55 billion cubic metres per annum of gas to Germany across the Baltic Sea.
However, the project is awaiting certification as an independent operator in Germany and is also trying to overturn a requirement for Gazprom to use only half of its capacity, with the rest to be made available to third parties.
“These barriers are still there and they do not permit Nord Stream 2 to start operations”, said Putin.
“If [Gazprom] starts deliveries [via the new pipeline], then I am sure the tension in the European [spot gas] market may ease”, he added.
“During the last decade, systemic flaws have been introduced into the European energy system. When nuclear and gas generation had a larger [market] share, such [a gas crunch] crisis could not happen," Putin said.
Europe's "systemic flaws"
Putin claimed it was "the deficit of electricity generation in Europe this summer” that led to the spike in gas spot prices and not vice versa, as “Russian political foes claim”.
“The problem is not in Russia, the problem is in Europe. Their wind turbines were idle this summer and they did not accumulate enough gas in [underground] storage [for winter]," said Putin.
He added that Russia increased its gas supplies to Europe, but the US reduced its LNG deliveries to Europe as they “sailed away” to Asia.
Putin said this “caused the panic” on the market, “but nobody wants to hear [our arguments], everybody just blames Russia”.
Putin also lashed out on calls from Germany and the US to extend Gazprom’s gas transit agreement with Ukraine beyond its expiry in 2024 as a prerequisite for the start-up of Nord Stream 2.
“We need to understand the size of the future gas market in Europe before we commit to long-term gas transit across Ukraine," he said.
"How can we sign such a commitment if Europe will not buy this gas? Tell us how much you will buy and we sign [long term] contracts.”
However, Putin said, instead of concrete proposals “we are just told to extend the Ukraine’s gas transit contract — are you out of your mind or not?”