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Letter: Europe’s energy crisis should not be blamed on GazpromFrom Professor Jonathan, Stern Distinguished Research Fellow, Oxford Institute for Energy Studies, EU Speaker for the EU-Russia Gas Advisory Council 2011-15 Excerpt: Notwithstanding my admiration for Fatih Birol and the work of the International Energy Agency, it is important to set the record straight about responsibility for the current European gas market model, which has produced the high price levels of the past year (Report, January 13). A decade ago the EU-Russia Gas Advisory Council was created to discuss the implications for Gazprom’s exports to Europe of the introduction of the EU’s “third energy package”. As the “speaker” for the EU side, I recall the many months spent listening to our Russian counterparts telling us that abandoning long-term contracts and moving from oil-linked to market prices were extremely bad ideas. We disregarded these warnings and pressed on with the creation of market hubs and moved long-term contracts from oil-linked to spot prices. For 10 years we were right, aside from a very few months. Hub prices were substantially below those related to oil. As recently as May 2020, oil-linked prices were nearly six times those at hubs which were at historical lows. The continent was awash with gas. Long-term contracts requiring gas to be taken or paid for were the last thing anybody wanted, and Gazprom was losing money on exports. From the end of 2020 that situation changed. But the point is that Gazprom has consistently invited European companies to sign new long-term contracts if they want assurance of supply. |
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