Gazprom Admits Cuts to European Gas Supply

Russian gas giant Gazprom has admitted that it was forced to cut gas supplies to Europe, following severe weather conditions which increased demand for gas.

At a meeting with Russian Prime Minister Vladimir Putin and Deputy Prime Minister Igor Sechin on Saturday, deputy chairmen of Gazprom's Management Committee, Alexander Medvedev and Andrei Kruglov said the disruption to supply had lasted only for a few days.

"There were several days when the supplies decreased slightly, by about 10 per cent, and on one day there was a reduction of supplies for Poland and Italy. But that was a matter of a few days only; otherwise the orders (from European customers) are filled in full," Mr. Kruglov told the Prime Minister.

Mr. Kruglov said that demand for gas this year far exceeded last year, as the weather continued to worsen last week.

"The output is about 300-400 million (cubic metres of gas) higher than last year," he said. "We are taking 630 million from underground storage every day. Due to the cold weather, both people and utilities companies are consuming more. Approximately 200 million more compared with last year.  We meet the demand in full; there have been no cutoffs. We work with the industry’s companies in accordance with the contracts. As to the importing countries and the neighbouring countries, we honour all our contracts – both contracts and obligations.

"We are now witnessing increased demand from European countries as they’ve also had some cold weather there."

Despite denials from Ukrainian gas company Naftogaz last week, the company again said that Ukraine was taking more gas than was allowed for in the country's contracts. Mr. Kruglov told Prime Minister Putin that Ukraine had recently taken between 150 to 170 million cubic metres of gas a day, far in excess of contracted amounts of 135 million daily. At this rate, he said, the country would be consuming 50 billion cubic metres (bcm) of gas a year, or even up to 60 billion cubic metres of gas.

Mr. Putin pointed to recent Ukrainian claims that the country would be cutting its yearly supply from Gazprom to 27 bcm of gas a year, despite a contract for 52 bcm.

"As long as the amount remains under 50, it would be within the bounds of the contract, while everything in excess of 50 goes beyond the contract they wanted to amend. Nevertheless, we must help Ukraine and meet their demand in full," he said.

The Prime Minister said that while Russia should continue to meet demand in Europe, the security of Russian gas supply remained paramount.

"I would like to ask you to exert maximum efforts to meet the demands of our foreign partners," he told the chairmen. "The top priority of the energy generation industry in general and Gazprom in particular is to meet the internal demand in the Russian Federation. This is a top priority."