‘Speculative frenzy is of no use to us,’ Putin says as Moscow mulls selling additional gas to combat soaring prices in Europe

Russia sees soaring gas prices in Europe as a source of concern rather than a boon, President Vladimir Putin said as top officials in Moscow consider selling additional gas volumes on an exchange to combat speculative demand.

Europe’s gas market has been suffering from the “assertive and careless” actions of European politicians, which has led to some “dire consequences,” Putin said at a video conference – particularly dedicated to the situation on the European gas market – with some of Russia’s top officials in the energy field.

The president once again said that Russia has no role and no interest in a development that saw gas prices in Europe hitting a historical record of $1,900 per 1,000 cubic meters earlier on Wednesday.

“Such speculative frenzy is of no use to us. We need to look into the future,” he said.

Russia’s Deputy Prime Minister and former Energy Minister Alexander Novak suggested selling additional volumes of natural gas on the St. Petersburg electronic stock exchange to combat the speculative demand.

The deputy prime minister believes that, although some “fundamental” factors like the falling gas output in the Netherlands and Norway as well as increasing demand in Asia did affect the gas prices in Europe, such a situation is largely speculative.

“Current price does not reflect the real situation. It is a speculative one,” he said, adding that it is the European leaders’ decision to opt out of long-term gas contracts in favor of spot prices that opened the way for stock exchange speculations.

Putin agreed that marketplace gas trading could be a quick solution if it indeed helps to combat speculative prices. Yet, it cannot be a long-term solution since, according to the president, it would not be particularly effective in the long run.

That is fraught with risks. Gas is not watches, pants or cars. It is not even like oil, which can be produced and then stored anywhere, including tankers, depending on the situation on the market.

Natural gas cannot be stored in the same way even when it comes to liquefied gas. It still needs to be produced, transported to a terminal, liquified and pumped into a tanker and later de-liquified. “That is a costly and complicated process,” the president maintained.

A speedy certification of the Nord Stream 2 pipeline that would allow Russia to use additional capacities of gas transportation to Europe could be another solution, Novak said. Putin also added that using the Nord Stream 1-2 pipelines for gas transit could be beneficial to both Russia and Europe since these gas transport systems are closer to Russia’s newest commercial gas fields than the older transport system going through Ukraine.

“That is more beneficial…and cheaper – both for the supplier and for the end-use customers in Europe.”

Putin rejected the idea of additional gas transit through Ukraine for now, arguing that it would turn into pure loss for the Russian energy giant Gazprom. However, he earlier demanded that all commitments under the company’s existing contracts with Ukraine be honored regardless of Gazprom’s potential gains or losses.

So far, Russia has already been fulfilling all its current commitments under contracts with European partners, Novak said, adding that it is supplying more gas to Europe than in any of the previous years.

Although Moscow would try to provide additional gas supplies to combat speculative prices, it should not come at the cost of Russian consumers, Putin said. According to Novak, filling Russia’s own gas storage reserves ahead of the upcoming winter would be a priority for up to the next two weeks.

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