Europe made mistake in ditching long-term hedging gas deals – Putin

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MOSCOW, Oct 6 (Reuters) – Russian President Vladimir Putin said on Wednesday that Europe had made a mistake by reducing the share of long-term deals in natural gas trade and moving to the spot market instead, where prices have surged to record highs.

Gas prices have spiked in response to a recovery in demand, particularly from Asia, as well low levels of storage.

European benchmark Dutch wholesale gas for November has jumped almost eightfold since the start of the year, trading at a new all-time high of over 150 euros per megawatt hour (MWh) in early hours of Wednesday.

It reversed gains at fell to 116.3 euros by 1230 GMT.

Putin told a televised government meeting: “The practice of our European partners has confirmed it once more that they made mistakes.

“We talked to the European Commission’s previous lineup, and all its activity was aimed at phasing out of so-called long-term contracts.”

“It was aimed at transition to spot gas trade. And as it turned out, it has become obvious today, that this practice is a mistake.”

Russian gas group Gazprom has long resisted moving to spot trade in Europe preferring long-term deals, which sometimes last around 25 years.

Putin also reiterated that Russia has been a reliable energy supplier to Europe, which may see record-high Russian gas exports this year as Moscow is increasing gas supplies, including via Ukraine, in response to the energy crunch and stands ready to stabilise the market.

He said that Russian gas transit via Ukraine is set to exceed volumes agreed under Gazprom’s contract with Kyiv.


Earlier on Wednesday, Putin’s spokesman, Dmitry Peskov, said that Russia has had no role in Europe’s surging gas prices.

Gazprom has been accused by the International Energy Agency (IEA) and some lawmakers in the European Parliament of not doing enough to increase its supplies to Europe.

“There is absolutely no Russian role on what is happening on the gas market,” Peskov told reporters on a daily conference call.

“There are a couple of reasons (behind the gas crisis) – the way the economy is recovering, how demand for the energy resources is growing, as well gas storages are not filled in,” he said.

Putin also cited economic recovery and cold winter in Europe, which led to a reduction in gas storage as another reason behind the gas prices surge.

Peskov said Moscow was ready to discuss new long-term contracts for gas sales to European consumers and that Gazprom was meeting all its obligations. (Reporting by Vladimir Soldatkin and Gleb Stolyarov; editing by Catherine Evans, Jason Neely and Jane Merriman)

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