Russia to boost gas supplies to Europe - report

Russia is to set to boost gas supplies to Europe amid soaring wholesale prices, it was reported on Wednesday.

According to Reuters, Russian president Vladimir Putin said the country would increase supplies to the continent, including via Ukraine, in response to the energy crisis, and that Russia “stood ready” to stabilise the market.

As a result, Russian gas sales may hit a new record this year, Reuters quoted Putin as saying, while transit via Ukraine is set to exceed volumes agreed under the contract between Kiev and Gazprom, Russia’s state-controlled gas pipeline exporter.

Russia currently supplies around 40% of the EU’s gas and is the bloc’s biggest supplier. It has continued to fulfil its obligations under its long-term contracts, but has been criticised by some for not upping spot supplies, thereby fuelling the ongoing crisis.

Previously Putin, who has described the situation in Europe as one of “hysteria and confusion”, has blamed tight supplies on under-investment in fossil fuels. Economies across Europe are attempting to shift away from fossil fuels in favour of renewable energy.

Neil Wilson, chief market analyst at Markets.com, said: “The situation remains difficult of course, but it could be that Putin has just put a ceiling on these crazy market moves for the time being. There are other factors but a boost in supply from Russia would ease immediate concerns in Europe.

“Longer-term, the lack of fossil fuel capex in response to high prices is a big driver of prices staying higher for longer. Winter is coming and supplies are still very short and markets are volatile. Plus, how long does Putin play nice?”

Putin's comments looked to have calmed the market, with prices of some contracts retreating.

Earlier on Wednesday, wholesale gas for day-ahead delivery breached the £3 per therm mark in the UK for the first time, while contracts for November delivery surged nearly 40%. That gain was reduced to nearer 4%, however, following the report.

Global demand has spiked this year, pushed higher by extreme weather events and economies reopening following the worst of the pandemic. Supply, meanwhile, has been affected by a range of factors, including Russia, reduced storage facilities in the UK and a lack of wind to power renewables.