The price of gas falls to a minimum of a month after Putin’s order to refill reserves in Europe

Second day of sharp falls in gas prices in Europe. Yesterday Russian President Vladimir Putin ordered Gazprom, the Russian energy company, to increase gas pumping next month to refill European reserves. Inventory data in Europe shows that without Gazprom warehouses, European gas stock levels would be in a comfortable position.

The price of gas futures contracts fell by up to 9%, falling to levels of a month ago, after Putin’s new intervention on the supply of Russian gas. The president gave the order to the head of Grazprom on a television basis to increase gas inventories at its facilities in Germany and Austria from November 8, once Russian reserves have reached their maximum level to face the winter. “We will have a more favorable situation in the European energy market,” he said on the televised scene.

The price of gas has dropped below $ 80 for the first time in a month. This is not the first time that the Russian president has managed to lower gas prices. He already did, a few weeks ago, when he said that he would increase gas distribution if the European Union requested it. Putin’s statements come within the framework of the approval by Brussels of the start-up of the Nord Stream 2 gas pipeline, which carries Russian gas to Germany, passing through the Baltic countries.

Since the gas price crisis began, which is pushing other energies up, there are doubts about whether Putin is using Gazprom’s supply as a bargaining chip, as many experts doubt that the company has enough capacity to supply to Europe. It should also be borne in mind that despite Russia keeping its word to replenish European reserves, gas is still in the hands, in the tanks, of Gazprom.

The percentage of gas storage in Germany, where Gazprom has several facilities, is 71% full, according to data from Gas Infrastructure Europe. The situation with the facilities owned and co-owned by the Russian exporter varies: from 83% in Jemgum to 9.5% in Rehden.

Gas prices are skyrocketing with inventories at their lowest level in more than a decade just as the winter season begins. Despite strong supply needs, Russia has kept supplies limited and LNG shipments are being diverted to Asia to meet growing demand. Rising reserves does not necessarily mean that Russia is giving in to pressure to bail out Europe. The reserves will be stored at Gazprom’s own facilities, just as Russian production will increase anyway.

“Last month I would have said that Russia is giving priority to supplying its own reserves, now that they have almost full storage, there is nothing to stop increasing supplies to Europe,” explains Cuneyt Kazokoglu of Facts Global Energy.

European reserves would be at adequate levels if Gazprom warehouses are excluded

The use of gas supplies to blackmail is a shadow that haunts Putin. Many experts suggest that there would be no problem with reserves in Europe if Grazprom had not drained its inventories alarmingly, according to data from Gas Infrastructure Europe. “The biggest deficits are occurring in the Gazprom warehouses”, assures Domenicantonio De Giorgio of the University of Milan to the Financial Times.

In Putin’s previous intervention, in which he accused Europe of being the culprit of the current energy crisis for not anticipating the low level of its reserves, he assured that Gazprom had always complied with contracts and supplies. “It is true, but at the cost of being out of supply,” says the expert. In countries like France and Italy, where Gazprom does not have warehouses, the volume of inventories is normal at this time of year. If the inventory of the Russian company is excluded from the storage data, the level of reserves would be between 85% and 95%, which is the average of the last five years.

The Gazprom-owned Rehden natural gas storage facility in Germany, which accounts for nearly a fifth of the country’s storage capacity, is less than 10% full, having been full in October 2019, according to Gas data. Infrastructure Europe.