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14Oct21

German Cabinet rejects allegations of Russia’s non-compliance with gas supply contracts

The German government has officially rejected allegations of Russia's non-compliance with contracts for gas supplies to Europe, head of the Bundestag Committee for Economics and Energy Klaus Ernst told TASS on Thursday.

"On October 11, the German government officially gave a negative answer to my question of whether there are signs that the reason for the gas price surge was the failure of Russian energy suppliers to comply with their obligations under existing contracts," the German deputy said.

According to the Cabinet's response TASS obtained from Ernst, "the German government has no information about non-compliance by Russian energy suppliers with their contractual obligations."

The German authorities pointed to the fact that "various factors led to a significant increase in prices."

"After a long and cold winter, most of the storage facilities were emptied not only in the EU, but also in Russia and Ukraine. LNG supplies were redirected to the Asian market with higher prices," the German authorities said.

The Federal Ministry for Economic Affairs and Energy of Germany also noted that in summer Russia and Norway, the countries which are important for gas supplies to Germany, conducted technical works at their gas facilities. Also, there were difficulties in gas production, which led to a reduction in the volume of imported fuel.

"In light of the market recovery, formation of price taking into account CO2 tax and the growing importance of natural gas in electricity generation, the small volume of supply faced increased demand, which led to a significant surge in short-term prices," the ministry said in response to the deputy’s inquiry.

On Wednesday speaking at the plenary session of Russian Energy Week, President Vladimir Putin branded the allegations about Russia’s weaponizing the energy industry as "politically-charged drivel." He stressed that even during the toughest times of the Cold War, Russia regularly met its full contractual obligations for supplying gas to Europe on a permanent basis.

Putin also voiced an opinion that it is dangerous to further increase transit through the Ukrainian gas transportation system because it is exhausted by around 80-85%. He noted that deliveries along this route this year will be about 10% more than contractual obligations for transit.

[Source: Tass, Berlin, 14Oct21]
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