Putin offers to stabilise global energy prices
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Putin offers to stabilise global energy prices

By Sam Tabahriti 07 Oct 2021 (Last Updated October 8th, 2021 09:46)

UK gas prices have surged to fresh record highs today of up to almost 40%, before falling back, after Russia’s offer.

Putin offers to stabilise global energy prices
The UK relies for most of its supplies on a near just-in-time system of domestic production and imports from pipelines and seaborne cargoes. Credit: Press Service of the President of the Russian Federation/Wikimedia

Russian President Vladimir Putin has hinted that Gazprom, a state-backed monopoly pipeline exporter, may increase supplies to help Europe – a move that follows the surge of gas prices, which went up by almost 40% to £4 per therm. Following Putin’s comments, the prices dropped by 9%, at £2.66 per therm.

Putin said: “Let’s think through possibly increasing supply in the market, only we need to do it carefully. Settle with Gazprom and talk it over. This speculative craze doesn’t do us any good.”

He added that Gazprom was exceeding its contractual obligations for gas supplies through Ukraine this year – a remark aimed at staving off criticism from Europe that Russia is holding back supplies as it awaits approval for the new Nord Stream 2 pipeline.

It follows allegations from gas traders that one of the drivers of the rally in prices is that Russia may be limiting its European gas supplies to the levels in long-term contracts, and has let Gazprom’s storage facilities fall to very low levels.

Gas for next-day delivery also fell back from record levels. After hitting £3.55 per therm on Thursday morning, it was £2.31, down 17%, in the afternoon.

US Secretary of Energy Jennifer Granholm told The Financial Times that the US was “carefully” watching Russia’s role in the European gas crisis and trying to find ways to help, including assessing whether Gazprom was manipulating the market. “You don’t want to see energy made into a weapon,” she said.

Adam Guibourgé-Czetwertyński, Poland’s climate minister, asked the European Commission to investigate what he said were “clear signs of market manipulation” from Gazprom. Speaking at a meeting of EU ministers on Wednesday, Guibourgé-Czetwertyński said: “We have to be assertive in the face of Russian coercion.”

The UK relies for most of its supplies on a near just-in-time system of domestic production and imports from pipelines and seaborne cargoes – with the vast majority of UK homes heating with natural gas. Gas can make up more than 50% of all electricity generation when wind power generation is lower.

Europe is also suffering from very high electricity prices and the EU said on Wednesday that it would review the region’s power market and consider changes to regulation. The domestic production of gas in the continent has fallen sharply.