14 Oct. 2021 06:45

The international forum “Russian Energy Week” will take place in Moscow from October 13th to 15th. At the plenary session of the event on Wednesday, the Russian President explained the background to the current energy crisis with price records in gas wholesaling.

The international forum “Russian Energy Week” has started in Moscow. The main theme of the forum, which will run until October 15, is “Global Energy: A Transformation for Development”. Both domestic and foreign experts, representatives of energy companies, scientists and government representatives take part in several round tables. In particular, new challenges for the industry will be discussed, including climate change, environmental protection and the transition to new types of fuel and alternative energy sources.

Russian President Vladimir Putin attended the plenary session on Wednesday as a guest of honor. Against the background of the gas crisis in the EU, the politician detailed his country’s stance on the global rise in fuel prices, gas transit via Ukraine and the Nord Stream 2 gas pipeline. He also discussed the causes of the current situation on the global energy market Reason.

Energy crisis in Europe

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The plenary session focused on the situation surrounding record gas prices in the EU. Putin explained the causes of the acute crisis by emphasizing that gas consumption is seasonal. In contrast to previous years, many countries in Europe would not have replenished their gas supplies in the summer even after the previous cold winter. They had hoped for spot deliveries and relied on the “invisible hand” of the market. Against the background of a frenzy of demand, these countries would then have pushed gas prices up themselves.

“The rise in gas prices in Europe is the result of a shortage of electricity and not the other way around. And one cannot, so to speak, blame others, as some of our partners are trying to do.”

The Russian President also stated that the acute crisis in the EU energy market is due to the systemic errors that have been made in the EU energy industry over the past decade.

“As long as electricity generation from nuclear energy and natural gas was the leader, there were no similar crises.”

In the gas industry, not everything depends on the producers. Consumers also play a major role. That is why the situation remains anything but stable and predictable.

Gas transit through Ukraine

Against the background of the increased demand, Putin emphasized that Russia strictly adheres to its obligations under the concluded treaties. The country increased its gas deliveries to the EU by 15 percent. At the same time, the Kremlin chief warned against a further increase in gas deliveries via Ukraine. He described the Ukrainian gas pipeline network as ailing and did not rule out the possibility that the pipe could burst as a result of higher pressure. In that case, the EU would lose this route completely.

“That is a purely economic question. I have already told you that the gas pipeline network in Ukraine is 80 or 85 percent worn out, depending on the estimate.”

At the same time, the Russian President was prepared, with certain reservations, to extend the gas transit agreement with Ukraine and even to increase deliveries across the country. For this purpose, however, the infrastructure in Ukraine would first have to be thoroughly rehabilitated. Second, Russia would have to understand how much gas European consumers actually want to buy.

Nord Stream 2

The political issue of natural gas

Putin pointed out that some “irresponsible” Ukrainian politicians had already called for the nationalization of the fuel stored in the underground gas containers in Ukraine, which does not even belong to them. However, the politician dismissed the speculation as nonsense, according to which Russia is not pursuing its economic advantage with the Nord Stream 2 gas pipeline, but only wants to deprive the government in Kiev of the gas transit. On this point, the Kremlin chief referred to the attitude of Chancellor Angela Merkel towards the Baltic gas pipeline. Merkel had always assumed that it was a purely business project and that the construction of the pipeline was not politically motivated.

At the plenary session of “Russian Energy Week”, the Russian President expressed his opinion that the commissioning of the Nord Stream 2 gas pipeline could significantly alleviate the tension on the European fuel market. But so far it has not been possible due to administrative obstacles.

“We see that administrative barriers are not being removed. There are several problems associated with the EU’s Third Energy Package, which includes this project.”

At the same time, Putin announced the increase in the production of liquefied gas. By 2035, Russia wants to produce up to 140 million tons of liquefied gas annually and dominate 20 percent of the global market. While the role of oil and coal will decrease, the importance of natural gas as the most environmentally friendly fuel will continue to grow.

The international forum “Russian Energy Week” has been organized by the Ministry of Economy of Russia and the Moscow City Council since 2017. The previous meeting took place in 2019. The program of the fourth “Russian Energy Week” includes more than 30 business events in six major subject areas: “Digital Transformation”, “Economy and Market: New Scenarios”, “Climate Agenda”, “New Technical Solutions”, “New Regulation of the Energy Industry”, “Management potential in the energy and fuel sector”.

more on the subject – Financial analyst Hellmeyer: You shouldn’t demonize fossil fuels in Germany

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