Russian Deputy PM Says Nord Stream 2's Certification Will Help Cool Situation on Gas Market

Natural gas prices struck historic highs in European futures trading this week amid shortages ahead of the heating season. Officials have blamed the shortages to several factors, including cooler-than-normal weather last winter, competition for limited supplies with Asia, and over reliance on weather-dependent alternative energy sources.

Nord Stream 2's completion and launch will have a positive impact on stabilising and lowering gas prices in Europe, and regulators would be best served by speeding up the project's certification, Russian Deputy Prime Minister and former Energy Minister Alexander Novak has said.

Speaking to President Vladimir Putin at a government meeting on the energy market situation on Wednesday, Novak said that the natural gas crunch presently facing Europe actually began in Asia and South America, and that price levels are an indication of a recovery in global economic activity.

Along with objective factors behind high prices, the deputy prime minister listed poor forecasting and market speculation as others. "The factors which have come together – of course they would not have caused such a rise in prices without speculative approaches," he suggested.

Emphasising that the gas market needs to be stabilised as soon as possible, Novak noted that Russia will continue to fulfil its obligations with its partners, and added that on the whole, despite its status as a gas seller, Russia too is interested in seeing lower prices, since current rates have a negative impact on the market and force industries to shut down or to shift to alternative sources of energy.

Putin instructed Novak to "carefully" consider a possible increase in Russian gas supplies on the market, asking him to calculate the appropriate figures with Gazprom.

Along with Nord Stream 2's certification, Novak suggested that increasing volumes of gas on the St. Petersburg International Mercantile Exchange (SPIMEX) even by a small amount should help cool the current market speculation. Putin agreed but stressed that any increase should not be allowed to harm the domestic gas market, since supplies are still being pumped into Russia's underground gas storage facilities for the winter.

European gas prices have witnessed a record surge in futures trading this week amid shortages caused by a perfect storm of factors ranging from competition for supplies with Asia to lower than normal reserves caused by the colder than usual winter and spring of 2020-2021, and a failure by European countries to stock up reserves in the months since. The poorer than expected performance of new alternative sources of energy, such as wind and solar power, have also contributed to the shortages.