Russia Says Its Gas Is Best Deal for Europe Amid U.K. Spat
(Bloomberg) -- Russia moved to remind Europe that it’s the most flexible and reliable source of energy needed by the continent as the U.K. asks its allies to take a stand against the Kremlin over the poisoning of a former spy on its territory.
Energy Minister Alexander Novak urged policy makers not to allow the diplomatic dispute to seep into the commercial relationship with Europe, which gets about a third of its gas from Russia.
President Vladimir Putin, who will rule Russia for another six years after winning Sunday’s election, has repeatedly touted the country as a gas superpower, while Europe has declared plans to diversify resources. Russia was the only supplier able to step up deliveries to Europe during intense cold, raising flows to a record last month, Novak said. It has also sent cargoes of liquefied natural gas to Britain during critical moments this year.
“Should the statements become a reality regarding alternative sources for gas instead of Russia, that will damage first and foremost the consumers,” Novak said in a Bloomberg television interview in Moscow. “Should any company or country opt for another supplier, I don’t think that condition will be that preferential and beneficial for them."
Russia has been boosting gas sales to Europe to unprecedented levels since 2016 as the region’s demand is increasing and domestic output from big producers like the U.K. and the Netherlands is dropping. That’s left politicians concerned about the leverage Russia is gaining.
In the U.S., a group of 39 senators asked President Donald Trump to block the Nord Stream 2 pipeline, which Russia plans to start next year to bring Siberian gas into northern Europe. That line would run parallel to an existing pipeline underneath the Baltic Sea.
‘Guarantee the Compliance’
The U.S. president signed a law last year giving him the right to impose sanctions against investors or contractors participating in construction of Russia’s export pipelines. In Germany, Chancellor Angela Merkel’s government outlined plans to expand LNG infrastructure to reduce the nation’s dependence on supplies arriving by pipeline from Russia and Norway.
All those moves followed the emergence of another friction point along the main transit route that brings Russian gas into Europe. Moscow-based Gazprom PJSC is working on ways to circumvent Ukraine as a conduit for its gas after a long dispute with the nation over payments for supplies and transit rates.
Novak brushed aside a question about whether Gazprom’s recent move to cancel its contract with Ukraine would hurt Russia’s reputation as a reliable partner.
“We can guarantee the compliance with our commitments,” Novak said. "We have been doing this for 50 years already and we have necessary resources, capabilities and opportunities to ensure the long-term and reliable supply of our gas to Europe.” Ukraine still has an opportunity to remain Russia’s partner in gas deliveries if it offers “competitive” conditions, he said.
Russia’s pipeline projects aren’t the only target of international critics. The nation’s plan to underpin decades of oil and gas production by exploring its largely untapped coastal areas was pushed deeper into limbo as Exxon Mobil Corp. quit offshore drilling ventures in Russia amid U.S. sanctions.
Novak said that doesn’t change Russia’s plans at all as it will continue working on new developments.
“First of all, this is economic damage to Exxon itself, which lost the opportunity to work on preferential terms in Russia,” he said. “And as you know, nature abhors a vacuum and so new opportunities are created for other investors.”
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