IEA urges Russia to increase gas supply to Europe

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The International Energy Agency has called on Russia to send more gas to Europe to help ease the energy crisis, becoming the first major international body to respond to claims by traders and foreign officials that Moscow has restricted l ‘supply.

The Paris-based group said that while Russia fulfills long-term contracts with European customers, it is delivering less gas to Europe than it was before the coronavirus pandemic.

“The IEA believes that Russia could do more to increase the availability of gas in Europe and ensure that storage is filled to adequate levels for the next winter heating season,” said the IEA, which is mainly funded by OECD members to advise on energy policy and security.

“It is also an opportunity for Russia to underline its credentials as a reliable supplier in the European market.”

Some MEPs have called for an investigation into Gazprom, the Russian state-backed monopoly gas pipeline exporter. Foreign officials and traders questioned why the company limited further sales in the spot market to Europe, saying it fueled a price spike that raised household bills and threatened industries across the continent. .

The company has also destabilized energy traders by keeping the underground storage facilities it controls in Europe at low levels compared to previous years.

Gazprom chief executive Alexei Miller said last week that the company is meeting its supply obligations and is ready to increase production if necessary. But he warned that prices could rise further in winter due to shortages of underground facilities.

Gas prices rose again on Monday after Gazprom refused to reserve additional export capacity via Ukraine for October and reserved only a third of the space available on the Yamal gas pipeline via Poland .

Russia also wants approval to start the Nord Stream 2 gas pipeline to Germany, a recently completed project that is controversial in part because it will redirect some of the gas flowing through Ukraine, where Russia is waging a war. by proxy in the eastern border regions since 2014.

Gazprom and Kremlin officials have said Russia may increase gas sales once Germany and the EU approve the start of the pipeline, adding to suspicions that it has restricted sales in an attempt to ‘speed up the decision.

The IEA, which was formed after the Arab oil embargoes of the 1970s, did not blame Russia alone for the price hikes. He said strong demand for liquefied natural gas in Asia, which has diverted cargoes from Europe, has squeezed supplies around the world.

He added that blaming the rise of renewables for soaring prices was wrong. The drop in wind speed in Europe this summer is a factor that has boosted gas demand.

“The recent increases in global natural gas prices are the result of several factors, and it is inaccurate and misleading to dismiss responsibility for the clean energy transition,” the IEA said.

Thierry Bros, a former oil and gas advisor at the French Ministry of the Economy and professor at Sciences Po in Paris, said the IEA “highlights what has been discussed in the industry for some time, but many politicians in Europe have hesitated to address – the role that Russia has played in the current energy crisis ”.

“In many ways, it is the IEA that goes back to what it was originally created for: ensuring security of supply. “

European politicians have sometimes hesitated to blame Russia for rising gas prices, which have more than tripled this year. However, some members of the European Parliament have called for an investigation into Gazprom’s role in the crisis.

The IEA call comes as Russian President Vladimir Putin is considering allowing Rosneft, Russia’s state-owned oil company, to supply gas to Europe through the Nord Stream 2 pipeline, according to a person familiar with the matter.

Energy Minister Alexander Novak recommended allowing Rosneft to export 10 billion cubic meters to Europe per year through Gazprom’s export transit facilities in a recent report to Putin, the person said.

The amount is small compared to the 139 billion m3 that Gazprom exported outside the former Soviet Union this year. But that would mean the very significant end of Gazprom’s monopoly on gas exports, which are more profitable than the Russian domestic market.

The Kremlin wants to secure long-term supply contracts with Europe via Nord Stream 2, which it says will help drive down gas prices.

Rosneft and Gazprom are both controlled by longtime Putin allies.

Rosneft Managing Director Igor Sechin, who has campaigned for market access to gas exports for years, argued that allowing him to export gas through Nord Stream 2 would help Russia generate more revenue through record gas prices. It would also comply with EU energy regulations which oblige Gazprom to open half of Nord Stream 2’s capacity to third parties.

Gazprom is opposing the move, according to the report to Putin, on the grounds that high gas prices may not extend until next year. Russian newspaper Kommersant first reported on the contents of the briefing to Putin.

Rosneft and Gazprom declined to comment. Russia’s Energy Ministry also declined to comment.

Amos Hochstein, senior energy security adviser at the US State Department, told the Financial Times this month that he feared “lives might be at stake” in Europe in the event of a harsh winter, in part because Russia had “under-supplied the market relative to its traditional supplies”.