Putin claims he is not blackmailing Europe, gas crisis has already begun, countries cannot afford high prices

(Patria) - Gas prices in Europe have been soaring for weeks. Last Wednesday alone, the price jumped by more than 25 percent. Since the beginning of the year, prices on the Dutch TTF hub gas exchange, which is a benchmark for European prices, have skyrocketed by a dizzying 350 percent. European governments are concerned, and Putin assures that he is not using gas to blackmail Europe, but only that new contracts are needed if the Old Continent wants more Russian gas.

For European governments and gas suppliers, as well as consumers, whether companies or citizens, this is an alarm signal. And the heating season has just begun, and winter is yet to come. In Great Britain, representatives of the steel, chemical, and fertilizer industries have requested government assistance to ensure their facilities can continue to operate through the winter.

But for Putin, as the "New York Times" writes, this has come as a gift. Although he announced an increase in supply last Wednesday, he blamed European countries whose "policy consisted of exiting long-term contracts.".

"They made a mistake. We will let them freeze this winter, and then they will become more talkative," he said.

As European media recall, problems with gas supply are not new - in 2009, Russia's cutoff of gas supply through Ukraine, due to a dispute with that country over prices, debts, and commissions, caused shortages in a number of European countries.

The situation was further complicated by the outbreak of civil war in Ukraine and Russia's annexation of Crimea, followed by Western sanctions.

The Russian giant "Gazprom" began to gradually reduce gas supplies through the Ukrainian pipeline, while simultaneously building the alternative Nord Stream 1 and 2, as well as TurkStream, which was suspended and replaced by a similar project, TurkStream.

Because of this, Europe has been trying for years to reduce its risky dependence on Russian gas and diversify its energy supply, either by investing in green energy sources or by increasing imports of American liquefied natural gas (LNG).

Now Putin can rub his hands, as Europe once again has to look east in the hope that Russia will "turn the tap" and replenish the record low gas reserves on the Old Continent.

However, Putin tried to quell accusations of gas blackmail on Wednesday in an interview with CNBC as part of Russian Energy Week, claiming that Russia "does not use (gas as) a weapon" and that accusations of intentionally withholding a vital energy source are "politically motivated nonsense.".

"If they ask us to increase the volume, we are ready to do it. We will increase supplies as much as our partners ask us to. There is no refusal, none at all," Putin added.

His spokesman Dmitry Peskov had previously stated that Gazprom is supplying Europe with gas in maximum quantities under current contracts, and that any increase must be renegotiated, as "nothing can be supplied without a contract." This was in response to accusations by the International Energy Agency (IEA) and several members of the European Parliament that Gazprom is unwilling to meet demand.

Reuters also concluded in its analysis last month that Europe faces a "costly winter due to rising energy prices" this year, which will be felt by all citizens in their pockets.

Russian calculations regarding gas supply to the European market are certainly not the only factor in the explosive price increase. There is also over-optimistic reliance on green energy sources and increasingly serious supply chain problems caused by the pandemic, a sharp increase in demand as lockdowns end, a lack of capital investment, but also problems with the gas market architecture itself, which is inadequately regulated, especially in Great Britain, where aggressive competition and risky business among suppliers are encouraged while the state regulator sets maximum prices.

Serbian President Aleksandar Vučić will meet with Putin on November 25th, asking him to keep gas prices for Serbia the same for a few more months.

He stated that Serbia will deplete its gas reserves by New Year, and the meeting with Putin is of key importance.

"We have 6.5 million cubic meters of gas until the end of 2021. Every day for the past month and a half, we have purchased 6.5 million cubic meters of gas. We are already consuming more than that today. We are currently paying $270 per 1,000 cubic meters of gas, which is the best price in Europe. For St. Nicholas Day, our consumption will be 11 million cubic meters of gas, and we have to pay for it at the market price, which is already $1,200," said Vučić.

He stated that Serbia cannot afford the price the Russians have offered.

"The Russians said take 70 percent of the market price and 30 percent of the oil formula at current prices, which is $790 instead of $270. We are currently paying 100 percent according to the oil formula," said Vučić, adding that he will ask Putin for an extension until the heating season is over.