Gas prices in the UK and across Europe hit all-time highs yesterday, with experts warning that household energy bills could jump by hundreds of pounds. But they later fell after Russia hinted that it was considering pumping more gas to the continent.
In what The Times called an “unprecedented morning of extreme volatility”, gas prices “surged to new records”, as “fears of a winter energy shortage intensified but then retreated on hopes that increased Russian supplies would ease the crisis”.
President Vladimir Putin told a press conference: “Let’s think through possibly increasing supply in the market, only we need to do it carefully… This speculative craze doesn’t do us any good.”
After his intervention, UK gas prices dropped from a high of 407p to 290p a therm by early afternoon, although the newspaper noted that this is still “about eight times higher than a year ago”.
But critics think ulterior motives are at play at the Kremlin.
‘The world’s most controversial energy project’
Russia’s past statements have “fuelled criticism from European politicians who believe that Russia could increase output if it wanted to, but is instead choosing to restrict supply as a way of exerting its power”, said The Independent.
The paper said Moscow wants the EU to “green-light the opening of the completed Nord Stream 2 pipeline”, which would pump gas from Russia to Germany along the bed of the Baltic Sea, bypassing Ukraine.
The Economist has called it “the world’s most controversial energy project”, causing years of rifts between European countries and America. While Germany “vigorously supports it”, Poland thinks it is “anti-competitive”, the US thinks it is handing too much power to Putin, and Ukraine “sees it as a potential Russian noose around its neck”, said the magazine.
In an article for the Atlantic Council’s website last week, the chief of Ukraine’s gas transmission system operator, GTSOU, suggested the Kremlin was trying to “weaponise energy supplies” against Ukraine and Europe as a whole.
Russia’s “tightening grip” on gas supplies “is already being felt across Europe”, Sergiy Makogon wrote. “Anyone still wondering about the origins of the present European gas crunch should consider the Kremlin’s recent statement confirming that ‘the commissioning of Nord Stream 2 will balance natural gas price parameters in Europe’. If this is not an effort to blackmail Europe, what is?” he asked.
‘Expecting something in return’
Russia has repeatedly denied that its decision to withhold supplies is a politically motivated ploy to get Nord Stream 2 approved, and insists it has honoured all its contracts with European customers. It has also pointed to other factors behind the surging prices, such as last year’s cold winter and a recent surge in demand in Asia.
But yesterday Russia’s deputy prime minister Alexander Novak said certification of the pipeline could help cool soaring European gas prices.
Reporting from Moscow, BBC’s Steve Rosenberg said Russia had been “hinting” that it “expects something in return” for increasing gas supplies. There is no doubt that Russia has “spotted an opportunity here to exploit the situation” and the “suspicion is that it wants to put pressure on European regulators to speed up final approval” for the Nord Stream 2 pipeline.
As Britain faces a “bleak winter of soaring energy costs”, Putin is dangling an increase in gas supply at the same time as urging Brussels to agree to the new pipeline, said the Daily Mail, adding that the Russian leader “has the West over a barrel”.