Page 5 - FSUOGM Week 41 2021

FSUOGM COMMENTARY FSUOGM

Source: Kremlin.ru.

He said that sustainable development of oil, per 1,000 cubic metres after the president’s com-
gas and coal needed to continue. ments were published.
For years, Gazprom sold its gas in Europe
under long-term, oil-indexed contracts, which EU conclusions
give buyers and suppliers price stability. But For its part, the EU has largely rejected criticism
under former president Jean-Claude Juncker, that its green policies are the cause of the current
the European Commission made a concerted gas crisis. Wind power output across Europe
effort to liberalise gas pricing, putting pressure has been weak this year, putting strain on other
on Gazprom to sell more gas on the spot mar- sources of energy such as gas. Certain climate
ket, using gas-on-gas indexation, and phase out policies have also curtailed upstream invest-
longer-term, oil-indexed contracts. ment, making the bloc more reliant on imports.
A number of European buyers had com- “Today, the price rise happens while a pro-
plained that under the oil-indexed contracts, found transformation of the energy system is
Gazprom was overcharging for its gas, and this underway. We need to design a fair and forward
culminated in an anti-trust case that forced the looking response,” European Energy Commis-
Russian company to liberalise its pricing policy sioner Kadri Simson said in a speech on October
in 2018. 6. “We have to be clear. The current price hike has
“Our European partners ... made a mistake,” little to do with our climate policies and much to
Putin said, referring the liberalisation of prices. do with our dependence on imported fossil fuels
“As a result, now the gas price has broken all his- and their volatile prices.”
torical records; today it is already nearing $2,000 She said that the crisis was not the result of
per 1,000 cubic metres – ten times more than the weaknesses in the European electricity market
average price last year.” design, but rather part of a wider global trend.
Putin called on his officials to propose ways “The best response to the price challenge is to
of stabilising the global energy market. “We are progress faster towards our target goal of 65% of
ready for such work,” he said, noting that this renewable electricity by 2030,” she said.
should be done in a way that “takes into account European Commission President Ursula von
the interests of all participants in this process.” der Leyen took aim at Gazprom for failing to
The Russian leader added that Russia boost supply, while praising Norway for increas-
expected to send more gas via Ukraine this year ing its flow.
than the 40bn cubic metres per year it is contrac- “We are very grateful that Norway is stepping
tually obligated to send via the country. But in a up its supply, but this does not seem to be the
reference to the Nord Stream 2 pipeline, Putin case for example in Russia,” she said.
said sending extra gas through Ukraine was The EU president also announced that the
“economically unprofitable,” noting that Gaz- creation of a strategic gas reserve would be dis-
prom could save $3bn annually by sending its cussed at the next European Council summit,
gas to Europe via “newer systems.” due to take place on October 21-22. The EU
Putin’s words were vague, although the mar- does not currently have a co-ordinated policy for
ket nevertheless reacted strongly. At TTF, the gas storage, although many individual member
November contract plunged to under $1,400 states do have them. ™

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