Deputy PM: Gazprom to Increase Production Capacity if Europe Increases Volume of Long-Term Contracts

Earlier, Russian Deputy Prime Minister Alexander Novak spoke at a session of the Russian Energy Week, saying that Russia is able to increase its oil output, but the decision should depend on the market situation.

Russian Deputy Prime Minster Alexander Novak said in an interview with Business FM news agency at the Russian Energy Week event that Gazprom will develop production capacities on a larger scale if long-term contracts with its European partners grow.

"If there is an increase in the order from our European partners and an increase in the volume of long-term contracts, supplies, I think that Gazprom will, of course, develop its production capacities in an even greater volume compared to even today, which are already at maximum levels, compared to previous years," Novak said.

Gas prices are high in Europe because of low storage levels and not because of a lack of supply, Novak added.

"Today the European market is fully provided with gas, because the supply of imports in general, plus our own production, ensure the domestic consumption of the European market. At the same time, even partially gas is pumped into underground gas storages, that is, there is no shortage of gas," Novak said.

The Russian official added that the problem is related to the fact that "the occupancy of gas storages is at the minimum level over the past five years, that is, approximately 74%, while this percentage is usually higher - 85-90%."

"This, of course, raises concerns among market participants, there are risks, as a result, as usual, the market reacts, prices rise," the deputy prime minister said, adding that Russia’s Gazprom will increase production capacity if European partners increase the volume of long-term contracts.

Russian Energy Week takes place on 13-15 October in Moscow.

The European energy market has been rocked by a sharp rise in fossil fuel prices, especially natural gas, spurred by increasing energy demand amid the global economic recovery after months of COVID-19 lockdowns, as well as limited supply.