Europe’s missteps fuel gas prices, Russia says as fuel flows east


  • The price of gas in Europe hit a record high this week, rising nearly 800%
  • Yamal-Europe pipeline flows in reverse for day four
  • Novak says prices are cheaper with long-term contracts
  • Ukrainian officials see politics behind reduced flows

MOSCOW / KYIV, Dec.24 (Reuters) – Europe is paying record gas prices due to its inability to sign long-term supply contracts and could ease the pressure by ending delays on the Nord Stream 2 pipeline which connects Russia to Germany, a senior Russian official said on Friday.

The benchmark gas price in Europe hit a new record on Tuesday, up nearly 800% since the start of the year. The price fell on Friday, but it was still up over 400%.

Adding to the compression, the Yamal-Europe pipeline that usually sends Russian gas to Western Europe was flowing upside down for a fourth day on Friday, pumping fuel from Germany to Poland, operator data shows. of the German Gascade network.

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Russia has said the reversal is not a political decision, although it comes amid growing tension between Moscow and the West over Ukraine and a long-standing dispute over Nord Stream 2, which has been built but has not yet started commercial operations.

The project faces opposition from the United States and in particular from several Eastern European states, who say the pipeline will make the European Union even more dependent on Russian gas, which already supplies 35% of needs. in European Union gas.

In Ukraine, another Russian gas transit route to Europe, the head of the gas transport operator said Russian company Gazprom had reduced daily gas transit through Ukrainian territory to 87.7 million cubic meters (mcm) versus 109 mcm.

“The reduction in gas supplies to the European Union at a time when prices were reaching $ 2,000 suggests that these are not economic decisions but purely political ones, aimed at increasing pressure on the EU to launch Nord Stream 2 under the Russian Federation, “he added. Makogon wrote on Facebook.

The benchmark price for European gas climbed above 2,200 euros ($ 2,495) for 1,000 cubic meters on Tuesday.

Makogon said Europe has set a record for extracting gas from storage due to supply shortages.

Russia has repeatedly rejected accusations that it has been playing politics with gas and has said it is paying all the amounts it has pledged to provide. Companies with supply agreements also said their contracts were honored. Read more

Russian Deputy Prime Minister Alexander Novak said Europe is running out of additional Russian supplies due to delays in Nord Stream 2, which still needs German approval to start.

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“In my opinion, European consumers are very interested in the project to start working, while the companies, which participate in it, could have submitted additional requests within the framework of long-term relations on gas supplies through this new pipeline, ”he added. Rossiya-24 told Russian public broadcaster. Read more

He also said EU leaders made mistakes in reducing reliance on long-term supply agreements in favor of the spot market, where prices are more volatile.

“Countries, which receive gas through long-term agreements, receive it much cheaper,” Novak said.

The flaring gas market in Europe could find some relief from the reorientation of liquefied natural gas (LNG) shipments from Asia, as European prices make this diversion attractive. Read more

Gazprom, which holds the monopoly on Russian gas exports by pipeline, did not reserve gas transit capacity for exports through the Yamal-Europe pipeline for December 24, auction results revealed on Friday.

Gascade data on the Yamal-Europe pipelines showed throughputs at the Mallnow metering point on the German-Polish border going from Germany to Poland at an hourly volume of approximately 1,218,000 kilowatt-hours (kWh / h) Friday and had to stay at these levels during the day.

Data from Slovak gas pipeline operator Eustream showed that capacity nominations for Friday’s Russian gas flow from Ukraine to Slovakia through the Velke Kapusany border point were 739,843 MWh, compared to 785,160 MWh on Thursday. .

This decline was offset by higher nominations for flows from the Czech Republic to Slovakia, meaning that nominations for flows from Slovakia to the Austrian Baumgarten hub were roughly stable compared to the previous day.

($ 1 = 0.8818 euros)

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Report by Vladimir Soldatkin; Additional reporting by Jason Hovet in Prague and Natalia Zinets in Kiev; Written by Edmund Blair; Editing by Alexander Smith

Our Standards: Thomson Reuters Trust Principles.

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