European Gas Prices Soar 10% As Russia Refuses To Open The Taps

By Julianne Geiger

As the cat-and-mouse game continues over Russian gas to Europe, Russian Gazprom has refused to allow more gas into Europe via Ukraine for October, sending prices soaring another 10 percent Monday. 

Russia’s move to keep flows to Europe at a minimum means the continent cannot store up ahead of the winter months. 

According to Bloomberg, European gas storage is only at 72 percent capacity–a point they have been reduced to at this time of year in over a decade. 

Gazprom has only booked approximately one-third of the Yamal-Europe pipeline’s gas transit capacity that it was offered for October, according to Reuters, citing Interfax. Simultaneously, Gazprom has taken up no extra transit capacity via Ukraine. 

At Gazprom’s Sokhranovka and Sudzha natural gas network points–both on Russia-Ukraine border–the gas giant failed to book any of the 9.8 million cubic meters per day of capacity offered.

The European natural gas price benchmark, the Dutch TTF hub, saw prices spike by more than 10 percent Monday. 

October Futures were up more than 11 percent at 10:44CT. November futures were up more than 14 percent, and December futures were nearly a 15-percent spike. 

The lack of bookings “will likely force a major year-on-year drop in Russian supply this winter,” James Waddell, head of European gas at Energy Aspects in London, told Bloomberg on Monday.

European lawmakers are now calling on the European Commission to investigate potential manipulation on the part of Gazrpom, which insists it is in full compliance with existing contracts. 

Gazprom blames Europe for the crisis, citing its withdrawal of 66 billion cubic meters of gas from storage in the 2020-21 period, which the Russian gas giant says resulted in the delay of new gas supplies by three weeks.

By Julianne Geiger for Oilprice.com

(c) Oilprice.com

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