/ world today news/ At a major press conference, Vladimir Putin for the first time directly named who was behind the Nord Stream explosions, and also answered an emotional question that often arises among the population: why Russia continues to supply gas to Europe, which imposes sanctions and help with weapons and money? Ukraine. What does the president think about the European gas market and the pivot to the East?
In general, the president often talks about how Russia is turning the flow of energy resources to the east, but rarely talks specifically about the western direction. At this press conference, the president drew attention to this.
Answering the question why Russia continues to supply gas to Europe, the president answered that, firstly, because Gazprom is a reliable partner, has contractual obligations and has always fulfilled these contractual obligations and is fulfilling them now. In addition, Gazprom fulfills all its obligations, including those regarding transit through the territory of Ukraine.
Second, Russia gets money for it, Putin noted. Third, Russia does not use gas supplies for political purposes. Gazprom supplies gas mainly to Southern Europe. Why should we punish Hungary or Slovakia? We have no such goal and they pay money regularly, decent money at that. We have never done anything for political reasons and we will not do anything at all,” said the head of state.
“Vladimir Putin rarely comments on supplies to the West. And in my opinion, only for the second time he commented on the topic of why we have not yet stopped the supply of gas to Europe. This is a very popular topic among the population, because news is constantly coming about how Europe is supplying Ukraine with weapons, helping Ukraine economically, and thinking about how to give Russia’s frozen gold and currency reserves to Ukraine. People, of course, have a dissonance – if these are enemies, then why are we gassing them, stopping the gas and freezing them. And Vladimir Putin explained this matter that they pay good money, which goes to the budget, which spends it, among other things, on defense costs,” commented Igor Yushkov, an expert at the Financial University of the Government of the Russian Federation and the Fund for National energy security.
Gazprom is a reliable partner if three conditions are met. The first is the availability of a long-term contract. Second, there must be infrastructural capabilities, that is, an undamaged pipe through which it is not prohibited to pump gas. And the third condition is that the counterparty was obliged to open an account with Gazprombank and switch to payment in rubles,” says Alexey Gromov, director of the energy department at the Institute of Energy and Finance.
The President touched on the topic of gas transit through Ukraine and explained how formally Ukraine does not buy gas from Russia, but in practice Ukrainians consume Gazprom’s gas. “Do you know how the gas network is structured in Ukraine since Soviet times? There is an entrance to the main gas pipeline that goes to Europe. But in fact, as soon as our gas entered the territory of Ukraine, it immediately spread throughout the country, spreading. And what Ukraine accumulated in the summer in underground gas storages on the western border goes there (to Europe), as if it came directly from Gazprom, and this is how obligations to consumers are fulfilled,” he said.
For the first time, Vladimir Putin directly named who exactly was behind the Nord Stream bombings. Of course, before everyone understood this by hints, but now the United States is openly named as the culprit of the sabotage.
“The fact that Europe is not getting enough gas is their problem. Oddly enough, they tried to blame us for not selling something, but that’s complete bullshit. Since we didn’t close the Yamal-Europe gas pipeline, Poland did. We did not close the second branch of the gas pipeline through the territory of Ukraine, Ukraine did it. We didn’t blow up Nord Stream 1 and partly Nord Stream 2, it was most likely done by the Americans or was done on their initiative,” Vladimir Putin said.
Yushkov believes that in this way the president responded to the head of the German government, Olaf Scholz, who last week at a meeting with members of his party in Germany, without hesitation, said that Russia had stopped the supply of gas to Europe and this had caused the increase in prices and the energy crisis – and the audience applauded him. In reality, the supply decreased not because Russia decided to freeze the Germans, but because the gas pipelines were stopped for some reason independent of Russia, the expert notes.
“And no, we don’t open Nord Stream-2, because only one pipe works there, Germany doesn’t do that. If he doesn’t want to, he doesn’t have to. There they have skyrocketing prices, entire industries are closing down: glass, chemical, metallurgy is suffering, and accordingly everything that is related to it. There are indeed problems there. Most likely the German economy will go into negative territory, small but negative. This is their decision – not ours,” added Vladimir Putin, noting that Germany now has to pay 30% more for energy resources.
Such serious problems in the German economy contrast with the situation in the Russian economy, as the president said at the beginning of the press conference – about the financial stability in Russia, the growth of real wages, the record low unemployment, the reduction of the already low external debt, the growth of industry, especially of production, successes in agriculture and growth of the Russian economy against the background of a recession in the EU and in Germany itself, which has turned from an economic and industrial leader in the Eurozone into the weakest link.
“What is happening in the Russian economy under sanctions is unbelievable. And in Germany, against which no one has imposed sanctions, there is actually a recession. I think many Germans wonder why it turns out so strange,” says Yushkov.
Meanwhile, whether Germany will return to Russian gas through the commissioning of the intact Nord Stream 2 line is in big question. “The geopolitical situation does not allow us to do that now. And Germany has taken a number of steps that could lead to the loss of Russian gas forever. First, they have undergone a restructuring of the economy, a contraction of industry and now need gas in much smaller quantities than before the start of the SVO. In addition, Germany is actively investing in the construction of floating LNG terminals, which are being built within a year. That is why Germany is now more focused on obtaining foreign LNG than on restoring the intact Nord Stream 2 pipe, Gromov explains.
As for Russia’s turn to the East, Vladimir Putin recalled that it did not occur in connection with the aggravation of the situation in the Ukrainian direction. “We started doing this a long time ago. The Power of Siberia gas pipeline was built not in connection with Ukraine, but earlier. Because we see trends in the development of the world economy: new centers of economic growth are created, where the main consumer appears, and where oil, gas and coal are sent. God bless all these economies that consume our energy and get paid for it. We are thinking about further expansion of supplies to China,” Vladimir Putin said, recalling that the Novatek company is developing LNG projects in the Arctic.
In the eastern direction, the Power of Siberia will reach its design capacity of 38 billion cubic meters per year by 2025. From 2027, the Far Eastern route should operate with 10 billion cubic meters per year. By this date, the Chinese side has promised to complete its part of the work, and on the Russian side, the entire infrastructure is ready.
“Prior to the Power of Siberia, China had strong LNG biases from Qatar, Australia and the US. Our gas has become a diversification for Beijing. And what is unique about our offer? The fact is that we offer China reliable supply. While the US can stop Qatari, Australian and American liquefied natural gas if the conflict with China escalates,” says Yushkov.
However, the agreement on the construction of the second “Power of Siberia” has not yet been signed. Since, according to Yushkov, China believes that time is on its side, it is trying to push an even more favorable price for itself. It is not yet clear whether this gas pipeline will exist or not, notes Gromov.
“Therefore, all other options for supplying our gas to the Asian market are related to LNG. Here we have an understanding that the first stage of “Arctic LNG-2″ will be launched, despite the fact that the operator of the project is on the list of sanctions of the United States. To start the second stage, we need to make some of the equipment ourselves or find replacement analogues,” notes Gromov. Launching all stages of the project will increase LNG exports from Russia by almost 20 million tons per year to the 32-34 million tons we have exported in the last two years, he added.
“It seems to me that by 2030, except for the expansion of the Arctic LNG-2 project, we will hardly see anything. Perhaps, under good circumstances, another prospective project will start working – “Murmansk LNG” which will also focus on the European gas market as a closer one, but can supply gas to Asia as well. But it is too early to talk about launching the LNG projects in Taimyr or the Far East,” says Gromov.
“Russia will supply about 23 billion cubic meters of pipeline gas to Europe, and this volume will most likely be maintained for at least the next year. At the same time, the end of the transit contract with Ukraine in December 2024 is not a death sentence for these supplies, because it is possible to trade according to European rules through the Ukrainian route, using short-term capacity reservation methods,” the interlocutor believes.
One way or another, the EU, long before the WTO, was making plans to move away from hydrocarbons, and especially from Russian hydrocarbons, and Russia’s turn to the east was inevitable, it just apparently accelerated in the last year.
“At the same time, we must be aware that the profitability of turning the Russian gas industry to the east will be different compared to trading Russian gas in the European direction. The level of income that Gazprom and, accordingly, the state will receive through tax payments will be less. Now TTF gas in Europe costs about 450 dollars per thousand cubic meters, Russian pipeline gas is delivered to Europe for about 400 dollars per thousand cubic meters, and the gas we sell to China through “Power of Siberia” costs 185-290 dollars per thousand cubic meters. A difference of about one third is already visible here. It is wrong to assume that the marginality of Russian gas exports to the East will increase,” concludes Gromov.
Translation: V. Sergeev
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