Gas prices rise in Europe as fears grow Russia
may halt supplies via Ukraine
Threat of sanctions from Gazprom adds to turmoil
caused by damage to Nord Stream pipelines in Baltic Sea
Alex Lawson
Energy correspondent
Wed 28 Sep
2022 13.02 BST
Gas prices
have risen on fears that Russia could halt supplies to Europe through Ukraine,
adding to turmoil caused by damage to the Nord Stream pipelines under the
Baltic Sea.
The
Kremlin-controlled gas company Gazprom said it could impose sanctions on
Ukraine’s Naftogaz due to ongoing arbitration.
The
statement came after the discovery of leaks on the two Nord Stream gas
pipelines under the Baltic Sea near the Danish island of Bornholm in a
suspected act of sabotage, although exactly by whom or why remains unconfirmed.
The Dutch
gas price for delivery next month – the European benchmark – was up €16.10 at
€200.1 per megawatt hour (MWh) on Wednesday and the British equivalent was up
by 24.75p at 290.25p per therm.
Gazprom
said it had rejected all claims from Naftogaz in arbitration proceedings over
Russian gas transit, and had notified the arbitration court. It also said
Russia could introduce sanctions against the Ukrainian energy company, which
would prohibit Gazprom from paying Kyiv the transit fees if it further pursues
an arbitration case over gas transit.
Russian gas
travels into Europe via Ukraine via several key routes, including the
Brotherhood, Soyuz and Yamal-Europe pipelines. Transgas, which starts in the
west of Ukraine and flows into Germany, could also be affected.
Russian gas
flows through Ukraine have been steady at about 42m cubic metres a day in
recent weeks. Gas prices had already been pushed higher this week on the
surprise news of the leaks in the Nord Stream pipelines.
However,
although Nord Stream 2 contained gas, it had never started up commercial
operation, while flows via Nord Stream 1 have been halted since late August,
limiting the immediate impact of the damage. Flows via those routes are now
seen as unlikely to return.
Denmark and
Sweden have said major leaks on the two pipelines in the Baltic Sea were caused
by deliberate acts of sabotage carried out in each of the two countries’
exclusive economic zones. A western official told Reuters: “The multiple
explosions at the same time – it’s very serious, and is going to have to be
investigated.”
Norway’s
Equinor, Europe’s largest gas supplier, said on Wednesday it had stepped up
security measures at its installations after the suspected sabotage.
The Kremlin
said claims that Russia was behind a possible attack on the Nord Stream gas
pipelines were “predictably stupid”.
Analysts at
Refinitiv said the impact of the current UK cold snap has been mitigated by
increased Norwegian flows and supplies of liquefied natural gas imported from
around the world. However, the pound’s plunge against the dollar will increase
the cost of the gas bought in dollars for British importers.
The surge
in the price of gas came after weeks of declines in its price, buoyed by an
improving picture for European supplies this winter due to efforts to fill up
storage facilities. However, industry watchers are concerned that by next
spring, European gas facilities could be nearly empty without any Russian gas
to refill them.
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