Pressure on Europe to secure alternative gas supplies increased on Thursday as Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine stopped a major gas transit route.
The Astora underground natural gas storage facility in Rehden, Germany. Credit: David Hecker, Getty Images
Pressure on Europe to secure alternative gas supplies increased on Thursday as Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine stopped a major gas transit route.
Gas prices surged, with the key European benchmark gaining 12% as buyers were unsettled by the mounting threats to Europe’s supply, given its high dependence on Russia.
Moscow has already cut off supply to Bulgaria and Poland and countries are racing to fill dwindling gas reserves before winter.
Russia imposed sanctions mainly on Gazprom’s European subsidiaries including Gazprom Germania — an energy trading, storage and transmission business that Germany placed under trusteeship last month to secure supplies. It also placed sanctions on the owner of the Polish part of the Yamal-Europe pipeline that carries Russian gas to Europe.
Kremlin spokesperson Dmitry Peskov said there can be no relations with the companies affected nor can they take part in supplying Russian gas.
The affected entities, listed on a Russian government website, are largely based in countries that have imposed sanctions on Russia in response to its invasion of Ukraine, most of them members of the European Union.
Gazprom also said it would no longer be able to export gas through Poland via the Yamal-Europe pipeline after sanctions against EuRoPol Gaz, which owns the Polish section.
The pipeline connects Russian gas fields in the Yamal Peninsula and Western Siberia with Poland and Germany, through Belarus, and has a 33 billion cubic metre capacity, around a sixth of Russian gas exports to Europe.
However, gas has been flowing eastwards through the pipeline from Germany to Poland for some weeks, enabling Poland — which was cut off from Russian supplies along with Bulgaria last month for refusing to comply with a new payment mechanism — to build stocks.
Germany’s Habeck said Russia’s measures seemed designed to drive up prices but the expected three per cent drop in Russian gas deliveries could be compensated for on the market, albeit at a higher cost.
Dutch gas prices at the TTF hub, the European benchmark, rose by as much as 20% before closing 12% higher. The benchmark has skyrocketed over the past year, adding to the burden on households and businesses.
Although German gas storage is around 40% full, that is still low for the time of year and inventories need to be built up in preparation for winter.
