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Gas shortage in Europe may reach 70 bcm in 2021 — Putin

According to Russian President, this shortage was due to a cold winter, insufficient pumping into underground gas storage facilities, a calm and hot summer

SOCHI, October 21. /TASS/. The gas shortage in European countries this year may amount to about 70 billion cubic meters in conditions when Russia is increasing it gas supply while supplies from the United States and Middle East are declining, according to a statement by Russian President Vladimir Putin on Thursday speaking at a meeting of the Valdai International Club.

"The shortage in the European market could amount to about 70 billion cubic meters. This is a lot. That’s a man-made result of the economic policy of the European Commission. Russia has nothing to do with it. Russia, in particular Gazprom, has increased supplies to the European market: Gazprom - by 8.7% as a whole and by 12% - to non-CIS countries," he said.

"In absolute terms, this is more than 11 billion cubic meters of gas. The Americans and [companies] from the Middle East have under-supplied by 9 billion, and Gazprom has increased it by more than 11 [bln]," Putin added.

According to him, this shortage was due to a cold winter, insufficient pumping into underground gas storage facilities, a calm and hot summer, as well as for a number of macroeconomic reasons, including the European Commission's policy of moving away from long-term contracts to purchases on the spot market.

"Production in Europe fell by 22.5 billion cubic meters in the first half of the year - this is the first factor. Secondly, 18.5 billion cubic meters were not pumped into gas storage facilities. They pumped 71% and did not pump 18.5%. This is in the first half of the year. If you look at the whole year, you can multiply it by two," he added.

The crisis in the European gas industry escalated this autumn, after spot gas prices began to skyrocket, exceeding $1,000 per 1,000 cubic meters and almost reached $2,000 per 1,000 cubic meters amid low occupancy of gas storage facilities.

According to observers, the crisis was caused by a number of factors. One of them was the explosive growth in gas demand from Asia, which caused a surge in prices on the Asian market, as well as an outflow of supplies from the European routes. The situation was aggravated by the fact that the share of wind generation in Europe decreased.

However, the main reason for the high volatility in the gas market was the low capacity rate of gas storage facilities. As of mid-October, European underground gas storage facilities were filled by 71% of the volume of gas that was taken from them last season.