Putin sees European gas crisis as Russia’s golden opportunity

Russian President Vladimir Putin speaks during a plenary session of the Russian Energy Week International Forum in Moscow, Russia October 13, 2021. Sputnik/Mikhail Metzel/Pool via REUTERS

MOSCOW: Fresh from crowing over Europe’s gas crisis, Russian president Vladimir Putin now sees a chance to capitalise on it.

Putin wants to press the European Union (EU) to rewrite some of the rules of its gas market after years of ignoring Moscow’s concerns, to tilt them away from spot-pricing toward long-term contracts favoured by Russia’s state run Gazprom, according to two people with knowledge of the matter.

Russia’s also seeking rapid certification of the controversial Nord Stream 2 pipeline to Germany to boost gas deliveries, they said.

Putin is due to speak at the Russian Energy Week conference this week. Amid record daily swings of as much as 40% in European gas prices, he made a calculated intervention to cool the market last week by saying Gazprom can boost supplies to help ease shortages.

Still, even as the Kremlin casts Putin as Europe’s energy saviour, Russia’s under no illusion that it will gain political concessions from the EU or ease strained relations as a result of the crisis, according to a government official and a policy adviser close to the presidential administration.

“Putin senses an opportunity from the crisis,” said Andrei Kortunov, head of the Kremlin-founded Russian International Affairs Council. “Russia wants to prevent the EU from dragging its feet on certifying Nord Stream 2 and start talks on long-term stable prices for gas.”

Putin has blamed the energy crisis partly on “snobbish” EU officials and advisers who he said had pushed for the shift to spot pricing “and do not want to hear anything else.”

EU leaders will discuss the gas price surge and measures to blunt its impact at a summit in Brussels next week.

Europe relies on Gazprom for about a third of its natural gas supplies. While gas storage on the continent is being rebuilt from record-low levels for this time of year, there are limited options for deliveries from other sources such as liquified natural gas. With winter fast approaching, that leaves the region potentially more dependent on Russia for extra supplies to avoid shortages when cold weather hits.

Deputy prime minister Alexander Novak, who oversees Russia’s energy policy, said Tuesday that a hasty transition away from traditional power sources toward renewables had contributed to Europe’s supply crunch. Last week, he told Putin that swift European approval of Nord Stream 2 for delivery of gas would give “a positive signal” to markets.

The European spot market “is not a pricing tool that provides a long-term balance of interests of buyers and sellers,” Gazprom deputy chief executive officer Elena Burmistrova told the St Petersburg International Gas Forum on Oct 7.

“Buying gas at reasonable prices is, of course, good. But it’s even better to know exactly in advance how much it will cost in a month, a quarter and a year.”

For its part, the EU is hoping the gas crunch is a short-term phenomenon. It’s focusing on helping member states get through the tough winter – with prices set to stay high and a risk that Nord Stream 2 may not be ready to start for months.

Energy Commissioner Kadri Simson said that its underground storage of gas in the region was at around 75% of capacity, far lower than the last decade, but adequate to cover demand. ― Bloomberg

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