The Russian TV Channel One asked President Putin during the annual press conference on 23 December 2021 about the supplies of natural gas to Europe.
Here is the question and answer:
Pavel Krasnov, Channel One.
Mr President, the issue of gas is dominating minds, above all in Europe, of course. We are seeing an extremely acute gas crisis. However, when it broke out and prices soared, we started to hear endless accusations directed at Gazprom and Russia in general with ever increasing frequency. Another round of accusations on restricting supplies via the Yamal-Europe pipeline came the other day. Generally speaking, the accusations are contradictory: we are accused of monopolising the market, while also not supplying enough gas.
Yesterday, our Ukrainian neighbours made some news. Naftogaz again asked the European Commission for nothing less than to compel Gazprom to offer more gas for sale. This seems funny, of course, but the Europeans are not in a laughing mood. The situation in Europe is very difficult: gas prices set an absolute record – more than $2,000. This never happened before and was impossible to even imagine. But is Gazprom to blame for this?
Mr President, here is my question: is there at least a tiny grain of truth in these accusations against Gazprom?
Vladimir Putin: Certainly not. There is no truth to them. This is like trying to say that down is up.
Our colleague here asked what the West does not understand. They lie all the time. This is why they are muddying the waters. Gazprom supplies all the gas requested by our counterparties under their contracts. Moreover, it has even increased supplies by almost 12 percent, I think, or by about 20 percent if we exclude Russia’s immediate neighbours. Overall, it is increasing supplies to Europe as well.
In my opinion, this is the only country, the only global company that behaves like this. I have already said at many meetings, including international events, that American suppliers withdrew considerable amounts from Europe, from the European market, I believe. I think the total amounts to 14 million tonnes of LNG. They took it to premium markets, first to Latin America, to Brazil, and then to Asia: China, South Korea and Japan. Because they pay more for this gas. The Europeans thought they had premium markets, but no. It appears that these markets are in other places as well. Prices began to soar. There are many factors: bad weather, a long and cold spring last year, a shortage of gas in underground storage facilities and windmills failing to work. All this contributed to the shortage.
In the process, government authorities are harassing their oil and gas companies, which do not invest enough in expanding production as a result. This is how the shortage emerged. They did not pump enough gas into underground storage facilities and now they are taking it out in a big way. Of course, this is a problem. Now some Western operators are storing their gas in Ukraine’s underground facilities. They are actively withdrawing it and using it in their own countries. This is understandable since the gas from underground facilities is many times cheaper than on the market.
We were saying – and I want to repeat it – that there was no point in destroying long-term contracts. The European Commission was telling us: no, it is necessary to move to market relations, the market will set it right. This is how the market made its adjustment – over $2,000 for a thousand cubic metres. Take it. No!
You are correct, just yesterday they were shouting: help, this is Russia and Gazprom expanding and taking over the market. We are not taking over anything. Indeed, we supply a lot, but we are not the only suppliers to the European market. However, we are probably the only ones who are increasing our supplies.
We are being told to pump to cover the needs of the spot market, since they need to first meet the demand of their counterparties under long-term contracts.
Look at what is happening. Germany is our largest consumer in Europe. I might have my numbers off a little, but they take about 50–51 billion cubic metres a year. We supplied an extra 5.6 billion cubic metres there, which is more than 10 percent. Listen, this is a decent amount. We supplied an extra 4.4 billion cubic metres of natural gas to Italy.
You just mentioned the Yamal–Europe natural gas pipeline. I see Russia and Gazprom accused of Gazprom failing to book capacity for gas supplies to Europe via the Yamal–Europe route for the second or third day in a row. That is disgusting, how should I put it… Well, okay. This is just totally out of line. After all, it failed to book capacity, because its counterparties and companies, mostly German and French, who buy gas from this route, failed to submit bids for purchase. What is there to transit if Gazprom has not received purchase requests? What did they do then? They turned on this route in reverse mode and have been pumping gas from Germany to Poland for several days now.
I think everyone would find it interesting. Why? Because we supply gas to Germany under long-term contracts at prices that are three, four, six, or even seven times lower than on the spot market. Should you resell even 1 billion cubic metres of gas, you will make almost a billion dollars, 900 million plus. This is business. This is my first point.
They have stocked up on gas, having received from us 5.6 billion cubic metres on top of what is provided under long-term contracts, and are now reselling it. But there is more to it. After all, they are pumping gas in reverse mode, so how can it be supplied in the other direction? Gas cannot move in both directions in one pipe at the same time. So, they: a) failed to place an order; b) turned it on in reverse mode.
But this is only a portion of the information.
There is a connecting pipe that connects the Polish pipeline system with the Ukrainian system. The volume is about 3 million cubic metres per day. This is exactly the amount that Germany is supplying to Poland. I have every reason to believe that this gas is eventually supplied to Ukraine. Consumers in Europe and Germany should know what is really happening, and, perhaps, ask certain authorities to clarify their stance.
Instead of supplying gas to Poland and then to Ukraine in an effort to help someone tide over, it would be better to continue supplies to Europe, Germany, for instance, and to reduce the spot price, because the more product on the market, the lower the price. No, they began to pump in reverse. This is the problem. How is Gazprom involved in this?
So let them tend to their business and address their issues in time and not think that they are so smart and that God fell asleep on them. They should address the problems of their own making, and we are willing to help them do so, which is what we are doing. I think I just made a convincing case for it. /// nCa, 27 December 2021 – complete text of the press conference can be found at the official website of the President of Russia at this link http://en.kremlin.ru/events/president/news/67438