IEA chief says Russia has considerable leeway to increase gas supplies to Europe

The head of the International Energy Agency said Russia has the capacity to send significantly more gas to Europe and ease the continent’s energy crisis, in an intervention that could strengthen claims, according to which the country retains essential supplies.

Fatih Birol, executive director of the IEA, told the Financial Times that the agency’s own analysis suggested that Russia could increase its exports by around 15% of peak winter supply to the continent.

Speaking the day after President Vladimir Putin hinted at increased shipments, Birol urged Russia to prove it is a “reliable supplier” by helping alleviate a plummeting supply shortage. energy prices and threatened the global recovery from pandemic lockdowns.

“If Russia does what it said yesterday and increases the volumes to Europe, it would have a calming effect on the market,” he said. “I’m not saying they will but if they want to, they have the capacity to do it.”

The IEA, which is primarily funded by OECD countries to provide advice on energy policy and security, first said last month that it believed Russia could increase supplies to the Europe, but without specifying by how much.

Gas prices have been climbing for months and soared on Wednesday amid the growing prospect of supply shortages over the winter. But a 40 percent price gain in the UK quickly fell back to a 9 percent drop on the day Putin hinted at larger supplies.

Gazprom said Putin’s comments had a calming effect on Russian producers and European consumers. “We all sighed in relief and said ‘Thank God!’ Elena Burmistrova, head of Gazprom’s export branch, said Thursday at a conference in St. Petersburg.

Burmistrova said the turmoil in gas markets threatened the stability of the regional economy and proved that the long-term contracts Gazprom advocated were a safer option.

“Buying gas at acceptable prices is good, of course, but it is even better to know for sure in advance how much it will cost in a month, a quarter or a year,” he said. she declared. “We can all see in the markets how much this unpredictability can cost us. “

Russia has repeatedly stressed that it has fulfilled its long-term contracts, but has also indicated that more sales may be available once the Nord Stream 2 gas pipeline to Germany is approved. This has fueled suspicions from Ukraine and other Eastern European countries that it is trying to use higher prices to ensure quick approval of the project.

The line, which crosses the Baltic Sea, will bypass Ukraine, which turned west from Moscow after a 2014 revolution and has since waged a war against Russian-backed separatists in its east.

Dmitry Peskov, Putin’s spokesman, said on Thursday that there was “potential” to increase supplies in Europe, and strongly suggested that Nord Stream 2 was the best way to do it.

The alternative supply routes “work wonderfully and are much more high-tech and environmentally friendly,” Peskov said, according to Interfax.

Jennifer Granholm, the US Secretary of Energy, said this week that the United States was “carefully” monitoring Russia’s role in the gas crisis in Europe, including assessing whether Gazprom was manipulating the market.

IEA’s Birol said Russian exports were not the only ones responsible for the tight supply. The rapid economic rebound from the pandemic, prolonged maintenance of various projects and weather conditions also played a role, he said. But he warned that the price spike would hurt the industry’s long-term future.

“Very clearly, the gas market is not getting high marks from consumers around the world,” Birol said. “It has been touted around the world as a clean and reliable source to complete the energy transition, but it can cast a shadow over that picture. “

Birol said governments need to protect consumers from the short-term price spike, but added the record prices should also accelerate the transition from fossil fuels.