Russian gas: Europe is running out of time to find alternatives
Just 24 hours after Ukraine reduced the flow of natural gas through its territory to Europe, blaming interference by Russian forces, Gazprom suspended supplies through the Yamal-Europe pipeline that runs through Poland, and stopped sending gas to a distributor in Germany.
While the affected quantities are small, in total they represent only a small percentage of Europe’s total gas consumption, each underscores the region’s vulnerability – and the urgent need for the EU to decouple from Russia’s vast energy reserves.
“We’re now starting to see these different issues coming, and it’s an illustration of why Europe shouldn’t take gas supplies for granted,” Simon Tagliabitra, senior fellow at think tank Bruegel told CNN Business. “Governments should act now as if they were in a state of emergency,” he said. added.
Russia imposed sanctions on 31 foreign companies on Wednesday, the RIA Novosti news agency reported. Gazprom Germany and Aeropolgaz, operator of the Polish section of the Yamal-Europe pipeline, were on the list.
“There will be no relations with these companies, they are simply prohibited,” Kremlin spokesman Dmitry Peskov said on Thursday.
German Economy Minister Robert Habeck – whose country is a major buyer of Russian gas – said that Russia was no longer supplying Gazprom Germania subsidiaries, but alternative supplies were secured.
Futures prices for Dutch natural gas, the European standard, rose briefly 14% on Thursday morning, but have since fallen back, according to data from the Intercontinental Exchange.
The The developments show an increasing audacity on the part of Russia to disrupt its energy exports to Europe.
Ukraine rejects taps
The Ukrainian operator blamed “the intervention of the occupation forces” for the announcement of the suspension of the route. It accused the Russian forces of tampering at the crossing point and withdrawing gas. As a result, the operator said that “the stability and safety of all Ukrainian gas transportation” was endangered, and it was forced to suspend gas flows.
It was not clear when gas flows through Sukhranivka would resume.
The broader impact has so far been limited. While Ukraine in total transports about 30% of Russia’s gas supplies to Europe, according to the Independent Commodity Intelligence Services, The affected pipeline represented only 2.3% of the total gas supply in Europe.
Tom Marzik Manser, head of gas analytics at ICIS, said the modest market reaction was largely thanks to healthy gas storage levels, mild weather and a record volume of LNG imports into Europe last month.
“Actually the market is well supplied at the moment, all things considered,” he said.
But the shutdown raises the uncomfortable prospect of further disruptions to gas supplies in Europe as the fighting continues. The consequences could upset markets and send already high energy prices even higher.
Gas flow redirection
Katerina Filipenko, lead analyst for global gas supplies at Wood Mackenzie, said the shutdown at Sukranivka was causing a shortage of 16 million cubic meters per day. “There is sufficient physical capacity to fully compensate for this disruption,” she told CNN Business.
Ukraine’s gas company said it may increase gas volumes at another transit point, called Sudja, which is located in the far west in the Ukrainian government-controlled area.
But Gazprom refused to book additional flows along this alternative route – saying it would be “technically impossible”.
HoweverAnd Filpenko said the impact will be slight and that Europe must meet gas storage targets later this year.
Gas storage facilities in the European Union are about 37% full, according to data from Gas Infrastructure Europe. That’s normal for this time of year, but far from the 80% target the bloc set for November.
However, as the war rages on, further closures of major transit routes cannot be ruled out, analysts say.
Bruegel’s Tagliapietra said tensions could escalate further next week, when more European energy companies are due to make gas payments to Russia.
“We are still waiting for the EU Commission to say whether the ruble payment constitutes a breach of sanctions or not,” he added. “So, over the next two weeks, we may see potential outages, and we can’t take the gas supply for granted.”
Kushal Ramesh, gas and LNG analyst at Rystad Energy, told CNN Business that the EU should Create a buyer’s alliance, in which countries jointly purchase shipments of gas from all suppliers, “as soon as possible” to prevent countries from competing for the same gas supplies and raising prices.
Central and Eastern European countries will be directly affected by the decrease in Russian gas flows through Ukraine, according to a research note prepared by the Eurasia Consulting Group.
– Benjamin Brown, Nadine Schmidt, and Anna Chernova contributed to this article.