This morning, the spokesman for Russia’s natural gas company Gazprom, Sergey Kupriyanov responded on Rossiya-24 TV to the hysterical charges that Russia was holding back deliveries of natural gas to Europe. “All the allegations against Russia and Gazprom relating to delivering an insufficient amount of gas to the European market are absolutely groundless, unacceptable and untrue. In other words, it is a pack of lies.” Gazprom has delivered 100% of what they’ve been contracted to deliver, and more. Further, Kupriyanov repeated that they are willing to deliver additional gas under terms of present contracts, which of course are lower than the spot market. (Last week, natural gas hit an historic of $2,150 per 1,000 cubic meters, which translates to over $200/MWh for households. Gazprom’s average contractual price has been under $300 per 1,000 cubic meters, less than one-seventh of that.)
There was, indeed, a stoppage of natural gas through the Yamal-Europe pipeline through Ukraine last week, but the reality is that Europe, led by Germany and France, has simply not put in orders for more deliveries. “Gazprom books shipment capacity in accordance with the number of those requests, rather than the other way around.”
Russian President Vladimir Putin was somewhat more unbuttoned on the bizarre situation at his annual year-end press conference on Dec. 23, when asked about the charges that Russia was simultaneously trying to corner the market and also hold back from 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 1,000 cubic meters…. 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 meters a year. We supplied an extra 5.6 billion cubic meters there, which is more than 10%. Listen, this is a decent amount. We supplied an extra 4.4 billion cubic meters 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 meters of gas, you will make almost a $1 billion, $900 million-plus. This is business.... They have stocked up on gas, having received from us 5.6 billion cubic meters on top of what is provided under long-term contracts, and are now reselling it,” Putin explained.
He made the point that the natural gas stopped last week for lack of orders, and the people who didn’t order, also ran natural gas in the reverse direction—which would physically prevent product being delivered, should it have been ordered. The submerged insanity of treating staples of life as gambling chips seems to have broken out into open verbal insanity. Crazy is crashing on top of crazy.
