Azernews.Az

By Nigar Abbasova

Russian gas deliveries to the countries of the European Union (EU) may soon cost more increasing by nearly 11 percent.

Deputy Chairman of the Management Committee at Russia’s energy major Gazprom Alexander Medvedev said that the prices may go up, and reach the level of $180-$190 per 1,000 cubic meters, Ria Novosti reported.

Addressing Gazprom’s investor day in Singapore he recalled that European countries were paying on average $167 per 1,000 cubic meters of Russian gas in 2016.

The expected higher gas cost is in partly due to the November decision of the Organization of the Petroleum Exporting Countries (OPEC) on limiting crude oil output by 1.2 million barrels per day (to 32.5 million barrels per day). The reduction is believed to trigger further rise of prices for hydrocarbons.

Being the largest exporter of oil and natural gas to the European market, Russia supplies a significant volume of fossil fuels to the EU.

Medvedev went on to add that Europe remains the priority market for Gazprom. He noted that Gazprom’s share in European market increased up to 34 percent in 2016, as compared to 31 percent in 2015.

Gazprom increased the volume of natural gas supplies to the far abroad by 12.5 percent to more than 179.3 bcm in 2016, thereby breaking the historic high. The company has managed to increase its share in the European market mostly due to low prices for blue fuel, which were triggered by glut in the oil market.

Medvedev added that the strongest dynamics was recorded in supplies to Germany ,where an increase amounted to 4.5 bcm.

Natural gas supplies from Russia mainly go through transit countries such as Ukraine or Belarus. To reduce its dependency on transit countries Russia plans to implement North stream 2 and Turkish Stream natural gas projects, which will go bypassing Ukraine, establishing a direct link between Gazprom and the European consumers. Currently, Russia supplies some 70 bcm of gas through Ukraine on a yearly basis.

Medvedev said that Gazprom sees no reason for EU authorities to be against the North Stream 2, mentioning that the project bears economic importance and will benefit energy security in Europe.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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