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Putin Offers to Stabilize Gas Markets "on an Absolutely Commercial Basis"

CommoditiesOct 06, 2021 08:54AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Russia is ready to supply more natural gas to head off a growing energy crisis, President Vladimir Putin said Wednesday, on a day when U.K. and continental spot prices again hit all-time highs. 

"I would like to hear your suggestions as to what more we can do to stabilize global energy markets," Putin told ministers in a broadcast of his introductory statement at the start of a videoconferenced cabinet meeting. "We are ready to work on this, and we would like such work to be based on an absolutely commercial basis."

Russia is the one country capable of increasing gas flows substantially to European markets, where the shortage of gas is greatest, at short notice. However, the newly-completed Nord Stream 2 pipeline, which gas monopoly Gazprom (MCX:GAZP) would use for such additional flows, is still awaiting certification from German regulators before it can ship gas.  The pipeline project has also been beset by U.S. sanctions and by opposition within the European Union, where fear of Gazprom's dominance in the market is widespread - especially among countries in the former Soviet bloc.

Elsewhere in his comments, Putin repeated previous criticisms of what he called "mistaken" European policy shifts that had left the EU and U.K. markets vulnerable to supply squeezes, notably its refusal to sign new long-term contracts with Gazprom and its desire to buy more at spot prices. 

U.K. Natural Gas prices have more than quadrupled since June to levels far outstripping anything seen before. That has built up inflationary pressure in an economy which, like many across the developed world, is still running hot due to a year and a half of fiscal and monetary stimulus. As a result, bond yields have risen, as has the pressure on the Bank of England to raise interest rates to contain inflation. 

In continental Europe, the squeeze has been only a little less acute, with benchmark Dutch futures also rising to record highs on an almost daily basis. That has led major gas-intensive industrial users, such as BASF, Yara, CF Industries (NYSE:CF) and Fertiberia, all to stop or sharply reduce the production of ammonia in the last two weeks.  

Prices are spiking partly because levels of gas storage are far below their historical average for this time of year. Gas Infrastructure Europe estimates that storage sites in the U.K. and EU are just under 76% full, compared with an average level of nearly 90% over the last 10 Octobers. Given that drawdowns can be as high as 70 percentage points, that means a cold winter would almost certainly lead to persistent shortages and rationing, especially for industrial customers. 

 

Putin Offers to Stabilize Gas Markets "on an Absolutely Commercial Basis"
 

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Comments (16)
Edward Smyth
Edward Smyth Oct 06, 2021 1:21PM ET
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smart Vladimir! ****** them, wholly commercial. nice! ,
Karthik Rao
Karthik Rao Oct 06, 2021 1:11PM ET
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winter is coming
Gershom Zvi
Gershom Zvi Oct 06, 2021 12:38PM ET
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Green Energy is agonising and dying now
Jc Robinson
Jc Robinson Oct 06, 2021 12:30PM ET
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Nice
Suman Alexandru
Suman Alexandru Oct 06, 2021 12:18PM ET
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europe change to green energy. putin know this and want to deliver gas în good relation.
Roger Miller
Roger Miller Oct 06, 2021 11:35AM ET
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Putin has never been riding higher, especially ironic considering that prior to and just after the US election Biden and the Dems promised to punish him.
Trevor Roberts
LimitUp Oct 06, 2021 11:35AM ET
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Bernie wants to have a second honeymoon in Moscow.
Trevor Roberts
LimitUp Oct 06, 2021 11:34AM ET
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Many people will die in years to come while leftists ***with reliable energy.
Thomas Phantom
Thomas Phantom Oct 06, 2021 11:34AM ET
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go burn
Thuong Ha
Thuong Ha Oct 06, 2021 10:14AM ET
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Bravo!!!
Thuong Ha
Thuong Ha Oct 06, 2021 10:14AM ET
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Bravo!!!
Max Chan
Max Chan Oct 06, 2021 10:08AM ET
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Sanctions on Gazprom, oops... now will have to rethink that
Vlad Lozovskiy
Vlad Lozovskiy Oct 06, 2021 10:01AM ET
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Europe shut down most of their coal power plants, most of nuclear plants. And never replaced them with anything. Built bunch of natural gas plants.  Now Putin outplayed them all. While senile old dude closed bunch of pipeline projects in USA.
Ho Yuen Li
Ho Yuen Li Oct 06, 2021 9:47AM ET
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PUTIN SAVES THE WORLD !
Edward Smyth
Edward Smyth Oct 06, 2021 9:47AM ET
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what he wanted riding bare chested eh lol
William Smith
William Smith Oct 06, 2021 9:11AM ET
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All the energy grief can be laid on the leftists in Europe and America coupled with Biden's anti American executive orders giving OPEC control of oil pricing.
Edward Adigunawan
Edward Adigunawan Oct 06, 2021 9:08AM ET
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stupid leaders of europe...made Putin smile now. please admit defeat and give certificate to Putin pipeline asap and give him new long term contract. u got to pay for your mistakes LOL
New Jazenevd
New Jazenevd Oct 06, 2021 9:04AM ET
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Dems disrupted US gas industry, giving Putin the driving seat. Russia rules. What else could be expected with a senile fool at WH?
Meru Pet
Meru Pet Oct 06, 2021 9:04AM ET
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do you think there was some... meddling...?
New Jazenevd
New Jazenevd Oct 06, 2021 9:04AM ET
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Meru Pet  Meddling? More like sheer stupidity. Many Dems have no clue from where the energy comes or about any other real business.
Eudon Hickey
Eudon Hickey Oct 06, 2021 9:00AM ET
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Great idea
 
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