Russia's Shulginov says energy sanctions 'unacceptable,' may hinder gas market recovery

Political restrictions should not be applied to gas as an energy source, as they could derail the energy markets' uneven recovery from the pandemic in the wake of rising demand, Russia's energy minister Nikolay Shulginov said Feb. 21.

Shulginov, who was speaking at an extraordinary ministerial meeting of the Gas Exporting Countries Forum ahead of the full summit Feb. 22, said that the gas market "still needs balance and stability," and increased cooperation.

"We believe that unilateral restrictions on economic and energy cooperation and barriers on trade and investment in energy are unacceptable and hinder sustainable recovery," Shulginov said. "Political restrictions should not be applied to the use of natural gas as a feedstock."

His comments come as US and European leaders have repeatedly warned Russia of "deep and swift" sanctions, including on the Nord Stream 2 gas pipeline that is yet to become operational, in the event of an invasion of Ukraine.

European gas prices remain high on low storage levels and concerns over Russian supplies.

S&P Global Platts assessed the benchmark Dutch TTF day-ahead price at Eur72.85/MWh Feb. 18, up more than fourfold on the year.

Russian Deputy Prime minister Alexander Novak said in the week ended Feb. 18 the early launch of the Nord Stream 2 pipeline, which is yet to obtain certification from the German regulator, "can help stabilize the gas market in Europe."

Decarbonization efforts

Shulginov praised the European Commission's decision to classify gas as a clean energy source in the EU taxonomy, while highlighting the role of gas as one of the key fuels in energy transition.

"Our organization should help adequately assess the role of gas in achieving climate goals, to warn against premature and inadequate decisions, such as reduction of investments in the gas sector," he said.

Russia urged countries to not discriminate against its methods of hydrogen production.

"It is important to stick to and promote technological neutrality with respect to the method of hydrogen production, its production from gas," Shulginov said.

Russia's vast gas reserves are expected to help it achieve its targeted 20% share of the hydrogen market by 2030, although the country also plans to produce hydrogen from nuclear and renewable sources.

The Russian energy ministry has previously argued that up to 90% of emissions from gas-based hydrogen can be eliminated with carbon capture.