Kremlin realizes £ 20bn windfall as gas bills soar

The Russian state has raised £ 20 billion this year from its financial stake in the country’s gigantic gas supplier Gazprom, as energy prices and UK household bills hit critical levels.

Russia, which has been accused of worsening the crisis by cutting gas exports despite frenzied global demand, owns half of the gas producer which has boasted “one of the most successful years” of all years. time as demand increased.

Famil Sadygov, vice chairman of the board of directors of Gazprom, said in an interview with Gazprom magazine published on the company’s website a few days ago: “According to our projections, our income will break a record in 2021.

Concern: Industry experts fear Russian President Vladimir Putin is seeking geopolitical advantage in gas supply crisis

“The previous best result, which was reached in 2018 at 82 trillion rubles (£ 81.3 billion), will be surpassed with confidence.”

As a result, the share price has climbed 63 percent this year. This pushed up the value of the Kremlin’s stake by around £ 15 billion.

Gazprom has promised its shareholders an exceptional dividend of over one trillion rubles – of which £ 4.5 billion will go to the Kremlin – “a record figure not only for Gazprom, but also for the entire Russian stock market “, the gas giant added.

The feeling of jubilation at Gazprom will bring little comfort in the UK and elsewhere in Europe.

The energy crisis has pushed up prices in European countries amid high demand, claiming that President Vladimir Putin’s policies are weighing on household bills – an accusation Putin denied.

In the UK, energy companies have said bills could double to £ 2,000 this year without government intervention.

Last week, the Resolution Foundation think tank warned of a ‘cost of living catastrophe’ with household spending set to rise by £ 1,200 a year, about half of which is falling. adds to energy bills and the rest to other costs including inflation. and tax cuts.

Gazprom is the largest exporter of natural gas to the European market. It supplies a third of Europe’s needs, but the company has significantly reduced its exports in the past 12 months and supplies are below what they have been since 2016.

From 2016 to 2020, the average Russian pipeline gas supply was 218 billion cubic meters. But analysts at the price information agency Icis expect supply in 2021 to be in the order of 183 billion cubic meters.

Analysts say Gazprom simply has not supplied enough gas to meet demand from the rest of Europe.

“This tells you that we are relying too much on Russia,” said Henning Gloystein, director of energy, climate and resources at Eurasia Group. “Russian exports are at their lowest for several years.

“The question is whether they can’t or don’t want to [export more gas]. Neither is good.

Gazprom has promised its shareholders an exceptional dividend of over one trillion rubles - of which £ 4.5 billion will go to the Kremlin (pictured)

Gazprom has promised its shareholders a bumper dividend of over one trillion rubles – of which £ 4.5 billion will go to the Kremlin (pictured)

Russia and Gazprom have continuously denied claims the company is not supplying enough gas to Europe and insisted it continue to meet all of its contractual obligations to consumers. Putin publicly called the accusations “lies” a fortnight ago.

Analysts agree that the reduced flow of gas from Russia is just one of the problems disrupting the world’s energy supply.

Other issues include higher industrial and retail consumption, production barriers linked to Covid, and lower gas storage capacities in many countries.

However, there are fears that Putin may use the energy crisis to his geopolitical advantage. At the heart of these concerns is the controversial Russian gas pipeline Nord Stream 2.

The 745-mile pipeline project, which connects Russia to Germany under the Baltic Sea, is still awaiting regulatory approval from the West.

Some observers say gas supplies were deliberately blocked in an attempt to validate the pipeline.

James Huckstepp, chief analyst at S&P Global Platts, highlighted Russia’s influence on the European energy market when he said: “Russian flows through Europe are 30% below average on three years”.

Huckstepp added that wholesale energy prices in Europe could fall by around 50% if Russia increases its gas flows this winter.

But the question of whether Russia can do so remains unanswered, especially as Gazprom must fill its storage facilities in anticipation of the worst of winter.

Thomas Rodgers, European gas analyst at Icis, said: “There is not a lot of transparency about what happened in Russia.

“Some people say that Russia is withholding supplies to complete Nord Stream 2. But it is important to understand that Russia has had its own problems in terms of [prioritising] the internal market.

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