Gas prices skyrocket, Europe panic: Mr. Putin is willing to help... on one condition?

"Russia has been, is and always will be a reliable supplier of gas to consumers around the world - both in Asia and in Europe," Putin said.

Gas prices skyrocket, Europe panic: Mr. Putin is willing to help... on one condition?
Gas prices skyrocket, Europe panic: Mr. Putin is willing to help... on one condition?

With winter approaching and energy prices soaring in Europe, Russian President Vladimir Putin is taking the opportunity to use his country's leverage as an oil and gas superpower.

In a tumultuous day that saw gas prices in Europe rise by 40% in a matter of minutes, President Putin helped cool the situation by offering to help stabilize the situation. According to the Russian leader, the country is capable of exporting a record amount of fuel to Europe this year.

Russian Deputy Prime Minister Alexander Novak says that is possible after the now controversial Nord Stream 2 gas pipeline is approved.

The Nord Stream 2 pipeline, located under the Baltic Sea, is expected to be a direct gas pipeline from Russia to Germany. However, this project has been entangled in many geopolitical controversies between Russia, Ukraine and many European countries.

In the past, gas was brought through a transit pipeline located within Ukraine, but President Putin and many Russian officials said that this former Soviet-built pipeline makes costs expensive and causes pollution. than the new pipes.

"Let's think about the possibility of increasing gas supply on the market, and think carefully," Putin said on October 6.

Europe's energy crisis is spreading to stock and bond markets, raising inflation fears and the risk of crippling major industries. Countries in the region are struggling to cope, with the hope of being able to resolve the problem before winter.

Some European officials have blamed Russia for lower-than-expected supply, saying it is the main cause of the dire situation in the continent's oil and gas markets.

Meanwhile, President Putin insists that Russia has completed all of its gas supply contracts, and that his country does not want to see the "speculative madness" that is dominating the market.

"Russia has been, is and always will be a reliable supplier of gas to consumers around the world - both in Asia and in Europe, and has always fulfilled its obligations," Putin stressed. me."

Gas exports by Russian energy group Gazprom to Europe in the first nine months of the year neared an all-time high, according to the company. If that pace is maintained for the rest of 2021, it will be a record year for Russia, Putin said.

Market stabilization

Speaking during a meeting with Russian officials, Putin said soaring gas prices in Europe were more of a concern for the country than a "bargain".

President Putin has asked Russian energy officials to contribute ideas on how to stabilize the energy market, and Nord Stream 2 is not the only proposal.

For example, Mr. Novak, Deputy Prime Minister and former Energy Minister of Russia and one of the "architects" of OPEC +, also proposed selling more gas on Gazprom's electronic exchange, which has headquarters in St. Petersburg.

The Deputy Prime Minister of Russia believes that, although some "fundamental" factors such as falling gas output in the Netherlands and Norway as well as increased demand in Asia have affected gas prices in Europe, but The recent bullish panic is largely speculative. "Current prices do not reflect the real situation," he said.

President Putin agreed that trading gas in the market could be a quick solution if it really helps against speculative prices. However, this cannot be a long-term solution because according to the Russian leader, it will not be particularly effective in the long run.

"Gas is not a watch, a garment, or a car. It's not even like oil, which can be extracted, processed and then stored anywhere, including an oil tanker. , depending on the situation in the market.

Natural gas cannot be stored like petroleum, even if it is liquefied petroleum gas. It still needs to be extracted, liquefied, loaded into a reservoir, and converted to pure natural gas through a specific vaporizer at the point of consumption. It's an expensive and complicated process," the president said.

The reality is that the fate of the Nord Stream 2 gas pipeline is increasingly intertwined with the situation in Europe. The volume of Russian gas exports fell in September, meaning a decrease in supplies through transit routes through Ukraine and Poland, sparking criticism that Russia was holding back gas supplies to forcing other countries to accept Nord Stream 2 more quickly.

President Putin said Gazprom will ship more gas through Ukraine than contracted this year. He emphasized that Russia continues to maintain the contract with Ukraine, but in terms of economic efficiency and environmental impact, Russia's new pipeline system under the Black and Baltic Seas - including Nord Stream 2. - far superior.

Putin said the current market crisis is caused by the rapid economic recovery around the world that has "warmed up" demand for energy. An unexpectedly long and cold winter has exhausted Europe's gas reserves, the Russian leader said.

However, Putin also pointed out a "mistake" by European authorities to switch from long-term contracts favored by Russia to short-term deals on regional exchanges.

"Today, it is clear that this policy was a mistake," Putin said. "As a result, the price of gas has now broken all historical records and today it has risen to $2,000/1,000 cubic meters."

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