Oct 7, 2021
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Energy Development Meeting

Vladimir Putin held a videoconference meeting on energy development.

Vladimir Putin: Dear colleagues, good afternoon!

Yesterday we reviewed long-term plans related to global climate policy, and today I propose to discuss in more detail the current situation on the energy market and the prospects for its development.

The heads of the subjects of the Federation are also participating in our meeting. I think this is a good opportunity to jointly analyze the regional dimension of the large-scale processes taking place in the global energy market.

The world economy is now successfully recovering from the crisis of last year. Energy demand is increasing, and prices are going up.

As you know, the global energy market does not tolerate fuss and shuffling, investment plans here are of a long-term nature, therefore, harsh rash actions can lead, and, judging by the current market situation, lead, already lead to serious imbalances – such as we are now seeing on the European energy market, where several unfavorable factors have developed simultaneously this year.

First, the rapid post-crisis economic recovery has “warmed up” energy demand.

Secondly, at the beginning of 2021, a cold winter in many European countries led to a serious decrease in the reserves of natural gas in underground storage facilities. We are talking specifically about their underground storage facilities, the underground storage facilities of our European partners.

Thirdly, later, in the summer, due to the heat and calm weather, the production of wind energy was noticeably reduced.

It should be borne in mind that over the past ten years in Europe, the energy balance has changed dramatically. Many countries in the region have ditched coal and nuclear power plants in favor of weather-dependent wind power.

And finally, fourthly, the practice of our European partners. This practice once again confirmed that, in fact, they made mistakes. We spoke with the previous European Commission, and all of its activities were aimed at curtailing the so-called long-term contracts, was aimed at the transition to exchange gas trading.

It turned out that today it has become absolutely obvious that this policy is erroneous – erroneous, since it does not take into account the specifics of the gas market due to a large number of uncertainties. And consumers, including, for example, fertilizer producers, are losing price targets altogether. All this leads to failures and, as I said, to imbalances.

As a result, now the gas price has broken all historical records: today it is already striving for two thousand dollars per thousand cubic meters – more than ten times more than the average price of last year. I would ask my colleagues today to report in detail on how the situation is developing.

Meanwhile, I want to note that Russia has always been and is a reliable supplier of gas to its consumers all over the world – both to Asia and to Europe, in full, it always fulfills all its obligations – that’s all, I want to emphasize this.

Now, right before the meeting, I took a certificate from Gazprom. 2018 was a record year for us, for deliveries to non-CIS countries, first of all, we are talking about Europe, of course, because deliveries to the Asian region, while they are extremely small and do not have any significant impact on these numbers.

So, 2018 – 201.7 billion cubic meters, a record. 2019 was a little less in connection with the requests of our partners, 199.4 billion cubic meters. 2020-th, pandemic, reduction of production in Europe – 179.35 billion cubic meters. 2021 is the year of economic recovery. In the first nine months of this year, a plus to last year of 18.8 billion cubic meters – this is plus 15 percent over the same period last year, and if this rate continues, we may reach another record figure for the supply of our energy resources to Europe. and including gas.

Incidentally, these long-term contracts, under which Gazprom supplies gas abroad, have a minimum level of supply and a maximum one. There has never been a single case in history when Gazprom refused to increase supplies to its consumers if they submit appropriate applications – not a single one.

Our largest consumer in Europe is the Federal Republic of Germany, in the first nine months of this year, 2021, by 2020 – plus 10,124 billion cubic meters of gas, which is 131.8 percent compared to last year. Even in 2020, when the total volume of supplies to Europe decreased compared to 2019, we still delivered more to Germany – plus 4.7 billion cubic meters, that is, 112.9 percent.

By the way, we see all sorts of speculations about the gas transportation system of Ukraine, about supplies through it. I would also like to note here that our contractual obligations to supply through the Ukrainian gas transportation system – 40 billion cubic meters of gas per year. Over the nine months of this year, Gazprom has increased these supplies, this flow, more precisely, through the transport system of Ukraine by more than eight percent. And we can say with confidence that we will exceed our contractual obligations for gas supplies through the territory of Ukraine.

Increasing more, more volume is economically unprofitable for Gazprom, because it is more expensive. Pumping through new systems is much cheaper, by about three billion dollars a year to the corresponding supply volumes.

And, besides, I would like for information those who think – really think, and do not use it as an instrument of some kind of political struggle – think about preserving the environment, and so I would like to remind you that the supply through new pipeline systems that put into operation in recent years and are being commissioned now, it reduces the amount of CO2 emissions into the atmosphere by 5.6 times due to the fact that there is new equipment, a larger volume with lower emissions, bearing in mind the quality of the pipeline system through which it is possible to pump products from bOmore pressure.

Everyone should know about this.

But nevertheless, today I would like to hear proposals from you, dear colleagues, what else could be done to stabilize the global energy market. We are ready for such work and would like this work to be built on an absolutely commercial basis, taking into account the interests of all participants in this process.

I would like to emphasize that the current situation in the European energy market is another vivid example of the fact that hasty and even more politically tinged steps are unacceptable in any sphere, especially in matters of energy supply, on which the sustainable operation of enterprises, the well-being and quality of life of millions of people directly depends. …

Therefore, our decisions on the development of the fuel and energy complex of our country, Russia, must be balanced, they must take into account our national interests, and most importantly, the needs of our citizens, and, of course, must be focused on the long term. We need to try to look beyond the horizon, not even one, but two or three decades.

According to international experts, including OPEC, starting from 2035, the growth rate of oil demand will begin to slow down, but in general, until 2045, consumption will increase by about 0.7 percent annually.

Natural gas demand will continue to grow at a faster pace – over one percent per year. First of all, because gas, as a cleaner type of fuel, will replace coal in the global energy balance.

According to international experts, in the next five years, the demand for coal, especially in the countries of Southeast Asia, will slightly increase, and then, as they think, in the horizon of 10-15 years it will stabilize, further this demand will begin to decline, according to their forecasts.

But already now it is necessary to comprehensively analyze the impact of potential changes in the energy sector, the impact of these changes on our economy, to calculate all scenarios for the development of events.

Our actions such as the transition to a budgetary rule, the constant replenishment of the National Welfare Fund, ensure the long-term stability of our economy, moreover, regardless of the foreign policy situation and the external economic situation, which was clearly demonstrated last year.

At the same time, it is necessary to diversify the economy, actively invest in infrastructure and create new industries. Particular attention should be paid to the coal-mining regions, the creation of new jobs here outside the coal sector. I have already given such instructions.

Today I expect to hear a detailed report on what has already been done in this direction, and also propose today to discuss issues related to the development of new, promising areas in the energy sector, including small nuclear generation, hydrogen energy, the use of renewable sources, including tidal energy, which can have colossal potential.

We just talked about this yesterday. Yes, there are still many unresolved issues, but, of course, we need to think about this, we need to conduct appropriate research, including scientific research, we need to approach this seriously, thoroughly and think, as I said, for the future decades to come.

Let’s move on to the agenda. The floor is given to Deputy Prime Minister Alexander Valentinovich Novak …

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