Putin's words in the video conference today. Good stuff.
No mention really of shipping more, no-one has asked yet! Confirmed that the thought that they would meet the minimum through Ukraine, not ship more than it.
Now, the world economy is recovering well after the past year’s crisis. The demand for energy is growing and, hence, prices are soaring.
As you know, the global energy market does not tolerate hectic moves and vagaries. Investment plans in this area are long-term. Therefore, any abrupt and rash actions may lead, and, judging by the current market situation, are already leading to serious imbalances like those we are seeing in the European market that has been affected this year by several unfavourable factors all at once.
First, the rapid post-crisis recovery of the economy has 'heated up' the energy demand.
Second, gas reserves in many European countries’ underground storage facilities dwindled as a result of the harsh winter in early 2021. I am referring precisely to their underground gas storage facilities, the underground storage facilities of our European partners.
Third, the production of wind energy declined noticeably later in the summer because of hot and windless weather. It should also be taken into consideration that the energy balance has changed dramatically in Europe over the past ten years. Many countries in the region have given up their coal-burning and nuclear power plants in favour of wind power generation that is heavily dependent on weather conditions.
And, finally, fourth, the practices of our European partners [are to blame]. These practices have reaffirmed that, properly speaking, they have made mistakes. We were talking with the former European Commission; all of its activities were aimed at curtailing the so-called long-term contracts and at transitioning to gas exchange trading.
It turned out – and today this is absolutely obvious – that this policy is erroneous, erroneous for the reason that it fails to take into account the gas market specifics dependent on a large number of uncertainty factors. Consumers, including, for example, fertiliser producers, are losing all price benchmarks. All of this is leading to failures and, as I said, imbalances.
As a result, the gas price has broken all historical records. Today it is approaching $2,000 per thousand cubic metres of gas, which is over ten times last year’s average price. I would like to ask my colleagues to report in detail on the developments.
In the meantime, I would like to underscore that Russia has always been a reliable supplier of [natural] gas to its consumers all over the world, both in Asia and Europe. Russia always fulfils all its obligations in full – all its obligations, I would like to stress this.
Right before this meeting, I looked at a reference paper from Gazprom. Our exports outside of the former Soviet republics, primarily to Europe, of course, were at a record high in 2018, dwarfing deliveries to Asia that did not have any serious impact on these figures.
So, in 2018, we hit a record high of 201.7 billion cubic metres. In 2019, our partners asked for less, so deliveries were slightly lower at 199.4 billion cubic metres. Marked by the pandemic, 2020 saw a decline in European manufacturing, dragging gas exports down to 179.35 billion cubic metres. The economy has been recovering in 2021. In the first nine months, deliveries increased 18.8 billion cubic metres or by 15 percent year-on-year. If this momentum carries on, our fuel exports to Europe, including natural gas, can very well set a new record.
By the way, Gazprom’s long-term gas export contracts set forth minimum and maximum supply levels, and Gazprom has never refused requests for more supplies from its consumers, as long as they filed the relevant applications. There was not a single instance when Gazprom turned down an application.
The Federal Republic of Germany is Russia’s biggest European consumer. In the first nine months of 2021, it increased its natural gas imports from Russian by 10.12 billion cubic metres to 131.8 percent compared to the same period last year. Even in 2020, when the overall deliveries to Europe declined year-on-year, we still increased exports to Germany by 4.7 billion cubic metres, which gives us 112.9 percent.
I have to say that there has been all kinds of speculation on Ukraine’s gas transit system and deliveries through this country. I would like to reiterate that under the contract we have to pump 40 billion cubic metres of gas through Ukraine’s gas transit system per year. In the first nine months of 2021, Gazprom increased its supplies, or should I say transit volumes through Ukraine, by more than eight percent. We have every right to believe that we will exceed our contractual obligations in terms of gas transit through Ukraine.
Further increasing these volumes does not make economic sense for Gazprom, since costs will also be higher. It is much cheaper to supply gas using the new pipelines, saving us about $3 billion per year for the supply volumes in question.
In addition, I would like to inform those who actually care about preserving the environment, instead of just using this as a political weapon, that the new pipelines that were launched over the past years or are about to become operational can reduce CO2 emissions 5.6 times thanks to their new equipment. Accordingly, supply volumes go up, while emissions go down. This has to do with the superior characteristics of these pipelines enabling them to pump gas at a higher pressure.
Everyone must know this....
I would like to emphasise that the current situation on the European energy market is another clear example of the fact that hasty, let alone politically influenced decisions are unacceptable in any sphere, but especially so when it comes to energy supply on which the sustainable operation of enterprises and the welfare and quality of life of millions depends.
Therefore, our decisions regarding the development of the fuel and energy complex of our country, Russia, must be prudent, taking into account our national interests and, most importantly, the needs of our citizens, and, of course, they must be sustainable in the long run. We must try to take a look beyond the horizon of not just one decade, but two or three decades."
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