Russian President Vladimir Putin
(Russian President Vladimir Putin)

Signals from Putin that Russia will send extra gas to Europe next month

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Russia will increase gas supplies to Europe starting next month and the news sent fuel prices lower. During a televised meeting on Wednesday (Oct. 27) Russian President Vladimir Putin told the CEO of state-controlled energy giant Gazprom, Aleksei Miller, to finish filling underground gas storage facilities in Russia by November 8, and to then “start gradually increasing the volume of gas” in similar facilities in Germany and Austria.

This timeline would make it possible for Gazprom to “fulfill your contractual obligations to supply European partners with gas in the autumn-winter period,” the Russian leader added.

“As soon as we finish pumping (gas) into the UGS (underground gas storage) in Russia, we will start pumping our Gazprom’s gas into European UGS,” Miller told Putin.

Miller also said that Gazprom would reach the planned level of more than 72.6 billion cubic metres (bcm) of gas in domestic storage by Nov. 1, and would completely finish filling inventories by Nov. 8.

Gas markets in Europe and Asia have sky-rocketed this year, fueled by low inventories and a strong recovery in demand as economies emerge from lockdowns.

Europe’s stores of gas are 15% below the average for the time of year, according to James Huckstepp, head of European gas analysis at S&P Global Platts.

The benchmark Dutch gas hub spot prices have jumped by 365% since the start of the year, hurting consumers and holding back economies’ post-Covid recoveries.

European gas prices
(Source: FactSet)

Following Putin’s instruction to Gazprom, Dutch gas futures fell 8.9% to €79.10 ($92.35) a megawatt-hour on Thursday (Oct. 28).

Russia, Europe’s largest gas supplier, has been accused by some European and U.S. officials of intentionally withholding gas supplies to pressure Europe into approving Nord Stream 2, a new pipeline– with an annual capacity of 55 billion cubic meter- which will carry Russian gas across the Baltic.

Kremlin has denied the accusations that it was using energy exports as a political tool. Speaking at an energy conference in Moscow earlier this month Putin defended the reliability of Russia’s natural-gas exports to Europe.

Meanwhile, Moldova is involved in a dispute with Gazprom over energy supplies. Europe’s poorest nation declared a state of emergency last week and booked gas volumes from Poland, Ukraine and the Netherlands. Last year, Gazprom supplied 3.05 billion cubic meters of gas to Moldova, an increase of 5.5 per cent against 2019 (2.89 billion cubic meters).  A Moldovan delegation is currently negotiating a gas deal with the Russian energy giant.

Could this be the beginning to the end of Europe’s energy crisis?

With reporting by Reuters, Bloomberg, WSJ, Euronews