Putin explained record gas prices in Europe by EC policy
MOSCOW, ($1=72.84 Russian Rubles) – The policy of the European regulator with an emphasis on exchange mechanisms in determining gas prices has led to the current record rally in fuel. At the same time, prices under long-term contracts for Russian gas are growing much more slowly, which saves buyers from price shocks, Russian President Vladimir Putin said at a press conference.
“On the spot, in the free market in Europe, there is now $ 650 per thousand cubic meters. But it was the smart guys who came up with the market pricing for gas back in the last composition of the European Commission. Well, here’s the result for you. But we have a different approach. We also have market pricing. This price is tied to the oil price. Nobody regulates it – the market regulates it. But the fluctuations are much softer,” he said.
“Here [in the EU – IF]: they have not pumped into UGS facilities – they need a volume of up to 27 billion cubic meters. the price of gas began to overtake the price of oil and oil products. And you see how it jumped ?!” the president commented on the situation.
“And under long-term contracts and according to our pricing principle, Gazprom does not sell at such a price. And those who have agreed to conclude long-term contracts with us in Europe can now only rub their hands and rejoice. Otherwise, they would have to pay $ 650. Gazprom sells to Germany for $ 220 – in any case, it was quite recently. With the rise in oil prices, this price will rise, but it will be a soft thing. And Gazprom is interested in this because it creates a cushioned safety and for him. There will be no sharp fall and collapse of prices. That is the whole point. It is beneficial for everyone,” he added.
“But as the European Commission once thought up – now please shave. We got the desired result,” Putin summed up.
Gas price in Europe reaches $689 per thousand cubic meters
The price of the nearest (October) futures on the TTF spot index for gas on the ICE Futures exchange on Thursday afternoon hit 56.345 euros per kWh, or $ 689 per thousand cubic meters, according to the exchange data.
In August, the average value of a day-ahead contract on TTF was $ 533, since the beginning of September – already $ 631 per thousand cubic meters. Since the beginning of the year, the average price of a day-ahead contract on TTF was $ 335 per thousand cubic meters.
The historical perspective of comparing current price peaks rests on a March 2018 price spike of $ 1,000 per thousand cubic meters, when the legendary cold front, the Beast from the East, raged across Europe.
However, the steady rise in gas prices in the summer and fall of 2021 makes us come to terms with the idea that price records may soon be updated. But this will no longer be a shocking peak of several days, but a new base price level.
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