Europe's energy crisis pushes Gazprom to record profits

Gazprom

The Russian state energy empire Gazprom has made record profits on the back of Europe's energy supply crunch, and predicted a lucrative winter as the Continent braces for a cold snap.

The Kremlin-controlled company, the world’s largest producer of gas, reported record third quarter profits following surging prices in Europe, its largest export market.

Profits rose to 581bn roubles (£5.8bn) compared with a loss for the same period last year ago on sales that soared by almost three-quarters to 2.37 trillion rubles, another record high.

Famil Sadygov, Gazprom’s deputy chief executive, said: “The price of our supplies to Europe will be significantly higher in the fourth quarter, which will have a positive effect on results for the entire year.”

Europe’s reserves of natural gas are at historically low levels with supplies being used at the fastest pace in a decade, according to Bloomberg. Gas storage sites in Europe are just 64pc full, far below the 10-year average of 86pc for this time of year.

Energy prices surged on Monday after forecasts showed lower than average temperatures for the next fortnight that will increase demand for heating and could trigger shortages, analysts warned.

Prices for Dutch natural gas for December jumped by almost a tenth on Monday, while day-ahead power prices in France hit record levels of more than €300 per megawatt hour.

Tight supplies are likely to push forecasts for end-of-season gas inventories toward critical levels and drive prices even higher, said Stefan Ulrich at BloombergNEF.

“If the winter turned out to be particular cold, we could not rule out further extraordinary measures to calm the gas and by extension power markets,” he added.

Russia supplies about half the natural gas used by countries European Union. President Vladimir Putin has been using threats about supplies in a bid to win approval for Russia’s new Nord Stream 2 pipeline.

The United States and some European nations oppose the pipeline, which bypasses Ukraine and will export Russian gas directly to Germany via the Baltic Sea bed. They argue it would make Europe too reliant on Russian gas, but some other European governments say the link is essential to secure energy supplies.

The pipeline has been completed but is awaiting clearance from a Germany regulator before Russia can start exporting gas through it. On Monday the Kremlin warned the US not to escalate pressure on the bodies involved in the certification process.

The “deliberate policies” of some energy producers were to blame for soaring gas and electricity prices in Europe as well as factors such as increased demand and extreme weather, said the International Energy Agency chief, Fatih Birol. He did not name specific producers, however.

Rising wholesale prices have triggered a string of collapses of UK energy suppliers. The failure last week of Bulb, the seventh-largest supplier which had 1.7m customers, was the biggest to date.

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