Europe has reduced the flow of gas from Russia: what is the reason and what will happen to prices

Due to sanctions against the Polish Europol Gaz, Gazprom will not be able to pump gas to the EU via Yamal-Europe. Transit through Ukraine fell by 52%

Due to Russian counter-sanctions, Gazprom will not be able to use the Polish section of the Yamal-Europe gas pipeline from May 12, Gazprom spokesman Sergey Kupriyanov said on Gazprom’s telegram channel. The gas pipeline with a capacity of 33 billion cubic meters per year could compensate for the losses from the almost half reduction in gas transit to Europe through Ukraine. Since the beginning of May, the transit of Russian gas through Ukraine has fallen from 99 to 53 million cubic meters per day. Now the Polish section of the pipeline is used in reverse mode to pump Russian gas to Poland from Germany, although Poland refused to buy gas for rubles. The country will be forced to look for gas elsewhere because Germany is also faced with a reduction in gas supplies from Russia and will be forced to save fuel for itself. As a result, gas in the EU is rapidly becoming more expensive, as there is not enough of it and it is becoming more expensive,

On May 11, the Russian government imposed blocking sanctions against 31 companies from unfriendly countries, including Europol GAZ, as well as a number of former Gazprom subsidiaries in Europe, including Germany. German subsidiaries that own shares in gas storage facilities in Europe have also stopped receiving gas from Russia.

Against this background, on May 12, spot gas prices in Europe rose by more than 20% , the June futures on the most liquid Dutch gas hub TTF rose to $1,245 per thousand cubic meters. For Europe, such a rise in prices is critical – it is now actively pumping gas into underground storage facilities, and its supply on the market is not increasing. According to the owner of Lombi Consulting sro Roman Matsaev, gas prices in Europe will continue to grow if Ukraine and Russia do not agree on the use of the Ukrainian GTS in full.

Gas deliveries through Ukraine to Europe on May 11-12 fell by about half compared to the beginning of May. The operator of the Ukrainian gas transmission system OGTSU has announced that it is banning the intake of gas into the system through the Sohranivka station in the Luhansk region, which has come under the control of the Russian military. Gazprom refused to transfer gas flows to another entrance to the Sudzha station on Ukrainian territory. As a result, the application for gas transit through the GTS of Ukraine on May 11 decreased by 24.8%, to 72 million cubic meters. The application for May 12 – by another 27.5%, to 53.2 million cubic meters. million cubic meters per day.

Patrick Pleul/ZB/Global Look Press
Aleksey Grivach, head of the National Energy Security Fund, recalls that there has been no long-term contract for pumping gas through Yamal-Europe for two years, but before the introduction of counter-sanctions, the company could book these capacities on a daily basis at auctions if there was demand in Europe. Previously, it was expected that it was the purchase of a place in this pipe that would make it possible to compensate for the falling volumes of supplies through Ukraine.

The sanctions are a response to the seizure of Gazprom’s property in Europe, which was carried out by Germany and Poland. It would be strange to continue to fulfill the agreements signed with the stolen companies ,” Grivach believes.

He added that the Nord Stream gas pipelines (peak capacity 61.9 billion cubic meters, design capacity 55 billion cubic meters) and Turkish Stream (capacity of two strings – 31.5 billion cubic meters) are available for gas supplies to Europe, part of the Ukrainian GTS. The Nord Stream 2 with a capacity of 55 billion cubic meters per year is also completely ready for operation, there would be a desire to launch it.

Matsaev recalls that Ukraine does not lose revenue from the halving of transit – the contract for the transportation of 40 billion cubic meters of gas per year was concluded on the terms “pump or pay.” But the reduction in pumping is hurting the reputation of the Ukrainian system as a reliable gas transit country. Previously, even active hostilities were not an obstacle to gas supplies through this pipeline.

According to the head of the National Energy Security Fund, Konstantin Simonov, gas supplies to large European consumers (except for former marketing subsidiaries) will continue in full, and therefore he sees no reason for lawsuits against Gazprom on violation of contracts.

Gazprom was robbed. His marketing subsidiaries and underground storage facilities were arrested. He doesn’t have to be patient. The way out is in recalculating the necessary transit capacities for the fulfillment of firm contractual obligations, which decreased after a number of countries refused to pay for gas in rubles , Simonov believes

Patrick Pleul/ZB/Global Look Press
He adds that a ban on pumping through Yamal-Europe and marketing subsidiaries in Germany could leave Poland without Russian gas supplied by reverse, and Germany without the gas it expected to fill the selected gas storage facilities to heat the country in winter. . For Germany, the loss of such volumes from the market is critical: at record gas prices of $2,000 per thousand cubic meters, its factories and power plants were closed.

Germany cannot now implement the gas embargo against Russia, said at a briefing in Berlin the head of the German Ministry of Economy, Vice Chancellor Robert Habeck.

We cannot impose a gas embargo at the present time. I have spoken about this many times. If the opposite happens, that Russian supplies fall out, our gas storage facilities are 40% full. Other volumes are supplied through European LNG terminals … The prerequisites that we must create, firstly, in case Russian supplies stop and we survive the winter, there are none yet , ” RIA Novosti quotes the minister.

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