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Putin says rising European gas prices not in Russia's interests: report

Highlights

Novak does not see balancing of European market in short-term

Russian underground gas storage levels at 97% of plan: Shulginov

Russian President Vladimir Putin said Oct. 20 that Russia is not interested in seeing an increase in gas prices in Europe, which could have consequences for Russian gas producer and exporter Gazprom, the Prime News agency reported.

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"This also has some consequences for us... if consumption falls, and the current situation will lead to a drop in consumption, this will impact on our producers, including Gazprom," Putin was reported as saying during a meeting of the Russian government.

"Therefore, we are not interested in endless increases in prices for energy resources, including gas," he said.

Putin attributed current high price levels to a fall in coal and nuclear production in some countries, a harsh winter last year, low levels of wind generation, higher demand in Asia, and insufficient injections into underground gas storage.

Russian Deputy Prime Minister Alexander Novak said during the same meeting that the situation on European energy markets was unlikely to improve in the short-term.

"Of course, the current situation is causing concern. For now, unfortunately... we do not see that the balance of supply and demand in Europe will straighten out in the short term," Novak said.

"The situation on the gas market remains quite tense, this is primarily due to the fact that prices remain at a fairly high level... Now in Europe, on average, prices fluctuate around $1,000-1,100, and in the Asia-Pacific region, with a premium of about $1,200 per 1,000 cubic meters of gas," Novak said.

European gas prices have soared in recent months. The benchmark day-ahead TTF price hit a record high of Eur116.10/MWh ($39.5/MMBtu) on Oct. 5, according to S&P Global Platts price assessments.

Novak listed low gas reserves in underground storage facilities, declining domestic production and the switch away from long-term contracts to spot prices as reasons why the market is currently unbalanced.

Domestic demand

Energy minister Nikolai Shulginov said during the meeting that Russia's underground gas storage levels would be at planned levels by the end of this month.

"Pumping of gas into underground storage is continuing. This morning the plan was 97% completed and finally pumping will reach 100% by Nov. 1," Shulginov said.

Gazprom said previously that its plans to pump 72.6Bcm into underground storage in Russia by Nov. 1.

Shulginov added that Russia's coal reserves are around 16.5 million mt and fuel oil reserves are at 2.5 mil mt.

Shulginov said that power demand in the autumn-winter period of 2021-2022 will grow by 3%, against a backdrop of economic recovery and increasing demand.