Page 9 - FSUOGM Week 45 2021

FSUOGM PIPELINES & TRANSPORT FSUOGM

Gazprom hits back against accusations of

making the energy crisis worse

RUSSIA THE head of Gazprom’s export arm has hit back “There has been some inaccurate reporting
against accusations that the company is responsi- and speculation about Gazprom’s actions,” she
Gazprom began ble for the energy crisis in Europe, stressing that it continued. “We are not under pressure to sell
delivering gas to continues to abide by its contractual obligations. as much as we can in the shortest time. It would
Europe for storage on Gazprom has come under the spotlight in undermine the market’s predictability, both for
November 9. recent months as wholesale gas prices in Europe us and for our customers.”
have surged to record heights, while its storage She added she was confident that long-term
sites remain unusually depleted. As by far the demand and supply of gas globally would con-
continent’s biggest gas supplier, every action by tinue growing.
Gazprom has been closely watched, and prices Gazprom is sending gas to Europe in line with
have responded accordingly. the requests of its customers, she said, noting that
After touching nearly $2,000 per 1,000 its business partners and clients are not making
cubic metres in late October, the month-ahead such allegations against Russia.
future contract at the Dutch TTF hub promptly The executive went on to stress the value
slumped after Russian President Vladimir Putin of long-term, oil-indexed supply contracts in
suggested that Gazprom would help ease the ensuring a balanced and predictable market.
supply crunch. After regaining some ground, While this is Gazprom’s favoured method of
they fell again when Gazprom CEO Alexei Miller selling, its customers in Europe has steadily
said on October 27 that the company would start pushed for more gas hub-based pricing and
sending more gas to Europe on November 8, spot trades.
after finishing the filling of its domestic storage “To understand the advantages of long-term
facilities. contracts over spot contracts, one should ask the
Gazprom announced it had started send- major players in the European market,” Burmis-
ing gas for storage in Europe on November 9, trova said. “They will confirm that oil-pegged
although injection rates are low. It is unclear contracts are more profitable than spot contracts,
exactly how much production capacity the com- and that gas supplied by Gazprom under long-
pany has spare, given it is already on track to send term contracts is many times cheaper than that
a record amount of gas to Europe in 2022. supplied under short-term contracts.”
Though Gazprom has been accused of driv- In contrast, the European Commission has
ing up the price of gas in Europe intentionally, denied that its push towards gas price liberalisa-
whether to boost profits or put pressure on the tion has left it more exposed to the current crisis.
EU to approve Nord Stream 2’s launch, Gaz- The International Energy Agency (IEA)
prom Export CEO Elena Burmistrova denied recently weighed in on this debate, estimating
on November 3 that this was the case. that price reforms saved the EU some $70bn in
“We are not interested in record-low or gas import bills between 2010 and 2020 – a dec-
record-high gas prices. The latter leads to degra- ade when gas hub prices were generally lower
dation of demand, which contradicts our inter- than rates under Gazprom’s long-term con-
ests as a producer and supplier,” she said at the tracts. But those same reforms also cost the bloc
Flame conference in Amsterdam. “We want to an extra $30bn in bills this year alone, owing to
see a balanced and predictable market, where the spike in prices. The cost could grow larger
together with our customers we can successfully depending on how prices fare during the rest of
grow our business.” the year and into the next one. ™

Week 45 10•November•2021 www. NEWSBASE .com P9