Home Commodities Russia threatens to limit gas flows to Western Europe via Ukraine

Russia threatens to limit gas flows to Western Europe via Ukraine

by SuperiorInvest

Russia has threatened to cut gas supplies to Western Europe through the only pipeline that still connects the regions and warned it could cut flows through Ukraine from next week.

GazpromRussia’s state-backed pipeline monopoly accused Ukraine on Tuesday of withdrawing gas destined for Moldova from routes through the country and warned it may cut supplies from November 28.

While Russian flows to Moldova make up only a small percentage of those passing through Ukraine, any threat to the last remaining pipeline route to Western Europe is likely to unsettle energy markets as winter sets in.

But any loss of supplies through Ukraine could still roil energy markets as governments and traders believe Europe needs more than the gas it has in stock to meet heating and industrial demand over the winter.

Tom Marzec-Manser of energy consultancy ICIS said that while Gazprom’s threat so far only concerned Russian volumes bound for Moldova via Ukraine, traders were likely to fear it could be a harbinger of further cuts.

Large-scale cuts to Russian supplies have often stemmed from threats to cut volumes by small amounts initially, while Ukraine’s accusations of diverting supplies echo the 2009 gas crisis, when Russia ultimately cut flows to Europe in response.

“The industry has long feared that Russia could threaten the remaining flows to Western Europe via Ukraine this winter,” Marzec-Manser said. “We’ve seen in the past that small cuts in supply can turn into bigger cuts very quickly, and Europe is not yet completely out of gas supplies during the coldest months.”

Russia has been accused of “weaponizing” its gas supplies to Europe in retaliation for Western support for Ukraine. From the Moscow full range invasion in February it shut down all but one pipeline to Western Europe, including those that bypass Ukraine, such as Nord Stream 1. Supplies have been cut to just over 10 percent of pre-invasion levels, sparking a continent-wide cost-of-living crisis.

Europe’s gas benchmark, TTF, rose more than 8 percent to €124.50 per megawatt hour on Tuesday.

Prices jumped to more than 300 euros per megawatt hour in August — the equivalent of more than $500 a barrel of oil — when Russia cut off supplies on its biggest route to Western Europe, the Nord Stream 1 line to Germany.

But while prices remain historically high, they have eased in recent months after Europe filled its gas storage tanks to near capacity while mild autumn weather delayed the start of the heating season.

Gazprom said Ukraine had “accumulated” about 52 million cubic meters of gas – the equivalent of a little more than a day’s pipeline supply – over an unspecified period, which it said was intended for Moldova.

In recent weeks, about 43 million cubic meters of gas have been passing through Ukraine from Russia to Western European markets every day through the remaining gas pipeline.

Moldova is storing some of its gas in Ukraine ahead of the coldest winter months, analysts said, and Ukraine rejected Gazprom’s accusations on Tuesday.

The Ukrainian gas transmission system operator said in a statement that Gazprom specifically sought to block the use of the recently launched reverse flow mechanism on the Moldovan-Ukrainian border, which allows gas to be pumped in both directions.

“This is not the first time that Russia has resorted to using gas as a tool of political pressure,” said Olga Bielkova, GTSO’s director of government and international affairs. “It manipulates the facts to justify its decision to further reduce the volume of gas supplies to European countries.”

Gazprom said the cut in volumes would amount to a “short supply” from Moldova to Ukraine, but indicated it would continue the remaining normal gas flows to the country.

Source Link

Related Posts

%d bloggers like this: