As Europe faces cold winter, Putin profits from Russia’s gas production



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MOSCOW – In Europe, soaring natural gas prices have shut down factories, surprised politicians and alarmed consumers fearing a cold winter.

For Russian President Vladimir V. Putin, who turned 69 on Thursday, it all turned out to be an early birthday present.

The Kremlin for years held back Europe’s drive to cut emissions and diversify its energy supply, efforts that threatened to undermine a Russian economy heavily dependent on oil and gas exports. This fall, in Mr Putin’s eyes, the Europeans have finally secured their place: a confluence of events has catapulted energy prices to record highs, putting the Russian president in a position to step up to the rescue.

“Let’s think about a possible increase in supply in the market, but we have to be careful in doing so,” Mr Putin told his energy minister on Wednesday evening, causing gas prices to drop sharply in a matter of minutes – although they stay about seven hours. times higher than a year ago.

The television exchange underscored the dominant position Mr Putin, for now, still occupies as the leader of a country supplying more than 40 percent of the European Union’s natural gas imports. Russia has already used its role as a critical energy source to put pressure on individual countries such as Belarus, Georgia and Ukraine. The tensions now revolve around something more existential: the future of Russia’s most important economic link with Europe and a key geopolitical lever for the Kremlin.

“We decided, ‘We will let them freeze a bit this winter and then they will become more talkative, and will not insist on giving up gas quickly,” said Mikhail I. Krutikhin, energy analyst at consultancy RusEnergy. . “The stakes are very high.”

This kind of harsh talk breeds deep mistrust in Europe, where critics see Russia as deliberately withholding additional natural gas from the market to try to pressure Germany and Brussels to quickly certify Nord Stream 2, the submarine gas pipeline. which will transport huge quantities of gas to the West. Europe.

The decision by Russian public energy giant Gazprom not to fill its European storage facilities has contributed to the high prices, according to Trevor Sikorski, head of global gas at Energy Aspects, a London-based research firm.

“Russians can’t just wash their hands and say it has nothing to do with them,” Sikorski said. “It obviously has a lot to do with them. “

The European Commission is examining the claim that Russia is manipulating the flow of gas to push up prices, but has come to no conclusions. German Chancellor Angela Merkel, whose government backed Nord Stream 2 and called it a trade deal and not a geopolitical strategy, has dismissed accusations that Russia is partly responsible for the rise in European gas prices.

“To my knowledge, there is no order for which Russia has said we will not deliver it to you,” Merkel told reporters on Wednesday. “Russia can only deliver gas on the basis of contractual obligations.”

Jake Sullivan, the White House national security adviser, said Thursday in an interview in Brussels that Russia used to use energy “as a political weapon” but added: “Let it be what’s going on here now is something I’m going to leave to others. “

But he said the United States had “real concern” that the energy supply did not keep up with the recovery in demand. He said he discussed the issue with EU officials on Thursday and that the United States would like to “align with Europe” to secure more supplies. The United States opposed Nord Stream 2 on the grounds that it would increase Europe’s dependence on Russian gas, but in August it abandoned its threat to block the pipeline.

“We have a fundamental interest in seeing global energy supplies, both gas and oil, at levels sufficient to support the global economic recovery and not block it,” said Sullivan. “We would like energy providers to take action to make sure this is the case.

Russia has fulfilled its contractual obligations to European customers, analysts and officials say, but has resisted delivering much more even as demand increasingly outstrips supply. This has exacerbated an energy crisis fueled by various factors including increased demand as the world emerges from the pandemic, a cold end to last winter that left storage tanks low, higher demand from the China and weak winds in Europe which reduce the production of renewable energy.

The Kremlin, as has often been the case in Mr. Putin’s geopolitical approach, has seized the situation to gain a tactical advantage. Strong demand has offered Russia an opportunity to bolster Moscow’s insistence that European customers sign long-term contracts with Gazprom, rather than making short-term purchases on the exchanges. And it was a chance to push the EU to issue the final approvals for Nord Stream 2.

Gazprom advocates stress that the company is not required to deliver gas beyond what it has promised in its contracts and that EU officials are themselves to blame if they haven’t planned correctly.

“Do we have an obligation to deliver new, additional gas volumes? No, we don’t, ”said Sergei Pikin, a Russian energy analyst. “Where should Europeans get new volumes of gas from? Nord Stream 2.

Aleksandr Novak, Russia’s Energy Minister, made the connection to the pipeline explicit during his televised videoconference with Mr Putin on Wednesday. The certification and approval of Nord Stream 2 by the EU “as soon as possible” would give “a positive signal” which could “cool the current situation”, Novak told the president.

With the operation of Nord Stream 2, Russia’s grip on the European energy market would tighten even further, giving Mr Putin more opportunities to influence European policy. And that would reduce Russia’s dependence on Ukraine as a transit country for gas exports to Western Europe, potentially weakening a regional enemy.

Mr Putin insisted that Russia was not responsible for the difficult situation in Europe. But he did not shy away from one of his favorite modes of criticism: the schadenfreude.

“What we are seeing now is the result of their persistent actions, to put it bluntly – reckless to say the least and with dire consequences for the market,” Putin said, referring to European officials. “Talking to these so-called experts has always been quite difficult, because they do it with a well-known element of snobbery, their point of view is always correct and they never wanted to hear anything else. Hope we will see some fixes now.

It was an echo of a common line lately on Russian state television – that Europe falsely blamed Russia for a litany of sins even as it begged Moscow to sell more gas.

“They are afraid of freezing and demanding that Russia warm up Europe immediately,” quipped state television host Dmitry Kiselyov on his prime-time show in September.

On Thursday, the price of natural gas futures continued to fall as traders anticipated Russia would turn on the tap. A senior Gazprom official warned that price volatility in Europe was “destabilizing” and said the company was supplying gas in addition to contractual agreements “where we have such a technical possibility”.

“We really feel all the countries” facing energy price shocks, Gazprom chief Elena Burmistrova said at a conference in St. Petersburg, according to Russian news agency Tass. “It’s a colossal shock to the economy of any country. “

Anton Troianovsky brought back from Moscow, Steven erlanger from Brussels, and Stanley reed from London. The report was provided by Christopher F. Schuetze in Berlin and Oleg Matsnev and Alina Lobzina in Moscow.

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