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Outgoing German Chancellor Angela Merkel dismissed charges that Russian leader Vladimir Putin is partly to blame for the record spikes in European gas prices.
“To my knowledge, there are no orders where Russia has said we won’t deliver it to you, especially not with regard to the pipeline in Ukraine,” Merkel told reporters on Wednesday. “Russia can only deliver gas on the basis of contractual obligations, and not just only like that.”
In September, 40 members of the European parliament called on the EU to investigate the role of state-controlled Gazprom in the spike in natural gas prices, saying they suspected market manipulation. They raised the possibility that the gas exporter’s action was a deliberate effort to use energy prices to apply political pressure on Europe.
While leaders in France, Spain and other countries are calling for the EU to take urgent steps to address gas prices — which at one point on Wednesday were up 40% — Merkel was more measured.
“I just want to remind you that we have become used to very low gas prices,” she said after an EU summit in Slovenia. “Some of the shale gas in the US could not be extracted any more because the prices were so low that it wouldn’t have paid off. Now the demand is getting bigger again, and we will have to look very closely.”
Merkel’s lax view of rising gas prices might be explained by the fact that, unlike many other European leaders, she won’t run for re-election. The German leader doesn’t have to worry about angry voters any more who might punish leaders seen as being unsympathetic to people facing high energy bills.
In addition, the German leader has other reasons for diverting blame from Russia for rising gas prices.
Merkel pushed through the controversial Nord Stream 2 pipeline over the vociferous objections of the US and much of the EU. Critics warned that German dependence on Russian gas would increase as a result of the project and that Putin might one day use it as a weapon.
Merkel, however, made clear that neither Russia nor Nord Stream 2 had anything to do with the current gas shortage.
A lack of exports from Russia — which is refilling its own depleted storage — is one reason European gas inventories are less full than usual for the time of year. The continent’s supplies have also been capped by field maintenance in Norway, while the availability of liquefied natural gas cargoes has been constrained by plant shutdowns in the US due to hurricanes.
On Wednesday, Putin told an energy conference in Moscow that Gazprom would send more gas to Europe via Ukraine than it was contracted to in 2021, based on the first nine months of supply. Gas prices, which had been up as much as 40% earlier in the day, erased those gains after Putin’s announcement.
Bloomberg News. More stories like this are available on bloomberg.com
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.