EU industrial production is at record lows and the economy is suffering without cheap Russian gas, Gazprom CEO Aleksey Miller has said. His comments came after the German government warned that it faces a second consecutive year of recession in 2024.
The EU gas market is seeing ‘demand destruction’, Miller told the St. Petersburg International Gas Forum on Thursday. The term refers to a situation in which persistently high prices or limited supply of a certain commodity lead to lower demand for it and trigger a search for alternatives.
“Some [experts] say that [the situation] may be described as Europe’s energy suicide,” the head of the Russian state-run energy giant said. Others say that the “economic locomotive” has turned into “the sick man of Europe,” Miller added, in apparent reference to Germany.
The EU’s largest economy contracted 0.3% last year, with the slowdown being attributed partly to a sharp drop in pipeline gas imports from Russia. Germany’s GDP is expected to decline by a further 0.2% this year, Berlin’s Ministry for Economic Affairs announced on Wednesday. That would mark the second straight year of recession for the country.
Miller argued that the “deindustrialization of Europe” will continue, as well as increasing volatility in the gas market, warning that the trend could lead to “a new price shock for gas and supply disruptions.”
According to the Gazprom chief, EU policies have resulted in a nearly 10% decline in industrial production in the bloc, to the lowest levels in a decade. European industry will not become more competitive, Miller argued, saying that industries in the US spend up to five times less on energy.
The EU previously received the bulk of its Russian gas via the Nord Stream pipelines, but supplies stopped indefinitely after the under-sea infrastructure was damaged in a sabotage attack in September 2022.
According to EU statistics, Russia’s share in EU gas supplies plunged from 45% in 2021 to 15% in 2023.
Russian gas is currently delivered to Western and Central Europe via Ukraine, based on a contract signed by Gazprom and Naftogaz in 2019. Kiev, however, has said it has no intention of extending the agreement when it expires at the end of this year.