Russia’s Gazprom returns to fully meet European gas demand

MOSCOW, Feb 20 (PRIME) -- Russian gas giant Gazprom has fully recovered gas delivery to the E.U. whose demand jumped in February due to severe frosts, Deputy CEO Alexander Medvedev said in a statement Monday.

In late January and early February, much of Eastern Europe faced severe frosts and asked Russia to boost gas supplies. Russia, which was also gripped by adverse weather, reduced gas deliveries by about 10%, but later said that it reinstated the previous volumes. Kiev said that Russian gas transit volumes decreased by 12% in January and denied Ukrainian responsibility for the shortages, saying that the reduced volumes were due to supply cuts in Russia.

Medvedev said the frosts revealed a systematic problem in gas industry. In the crisis situation, spot markets and renewable energy sources failed to satisfy the increased demand in E.U., he added.

“Poor development of spot markets makes them highly vulnerable to any shocks. Thus, in early February … the price jumped by 60%,” Medvedev said, adding that gas price formula linked to the spot market was doomed to fluctuations.

“Political moves destroy the mechanism of mutual obligations and long-term stability, instead we are offered to rely on immature, illiquid and fragmented markets, that are objectively unable to resolve even the short-term problems, in particular conditions on continental Europe’s gas market.”

Medvedev also expressed concern that the E.U.-backed third energy package, designed to separate production, transportation, and sale of energy, would influence storage capacities.

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