Gazprom CEO says further rise in volatility of EU gas prices, new price shocks, supply disruptions possible

MOSCOW. Oct 10 (Interfax) - Gazprom CEO Alexei Miller has described the situation on the European gas market as "bad", noting the significantly higher prices for gas and electricity compared to competitors and, as a result, the deindustrialization of Europe.

"Volatility on the gas market will increase even more, and what is most unpleasant is that such a policy on the European market could lead to a new price shock for gas and supply disruptions," Miller said during the St. Petersburg International Gas Forum, noting that the process of deindustrialization will continue in Europe.

"The purposeful destruction of demand for gas" is currently taking place in Europe, he said. Demand for gas in the European Union and the United Kingdom fell another 11 billion cubic meters year-on-year in 9M 2024.

Miller said the falling demand was affecting the steel, cement and chemical industries, "the backbone of the EU's economy."

"Production fell almost 10% in some industries over the past year and a half. These industries saw a ten-year low in production. In some industries, the unit cost of production grew 25% in just a year and a half. All of this ultimately hits European industry hard, and everyone accepts that deindustrialization is proceeding, as they say, at full swing in the European Union," he said.

At the same time, the rapid growth in energy rates in the EU and gas price volatility are leading to a situation where it is impossible to control expenses in the short, medium or long term.

"Industrial enterprises in the EU have found themselves in a situation where some of them have simply closed, while, for example, half of enterprises in Germany are considering moving production to third countries or cutting production, and 20% of enterprises have completely stopped financing R&D. But without money for R&D, there's no technological development," he said.

At the same time, energy prices in the U.S. are 2-3 times lower than in Europe and gas prices are 4-5 times lower, which makes the European economy uncompetitive.

Gazprom expects global demand for gas to reach 5.7 trillion cubic meters by 2050, Miller said, and gas will take the lead in the global energy balance with a share of 26%, with population growth and digitalization the main factors behind the increase.

Demand for gas increased by 60 billion cubic meters year-on-year in 9M 2024, with 80% of the growth coming from three countries - China, India and Russia. According to Gazprom's estimates, demand will also grow in the Global South.

Miller assessed the prospects for the U.S., which is the world's current largest producer and consumer of gas. "The U.S. is seeing a slowdown in the tempo of gas production, the depletion of shale deposits, reduced funding for geological exploration, and growth in domestic demand. The most interesting thing is that we can see a 6% increase in U.S. imports of pipeline gas from Canada this year compared to last year. Not many people know about this, and few people know more generally that the U.S. is also a gas importer," he said.

"For Russia, new opportunities lie in the fair principles of global cooperation in the gas market as part of organizations such as BRICS," he said.