The gas supply crisis in Europe grows after the imposition of sanctions by Russia

  • Russia imposes sanctions on European subsidiaries of Gazprom
  • The Polish company that operates the Yamal-Europe section was also affected
  • Germany will lose 10 mm3/day of gas supply
  • Dutch gas prices rise up to 20%

BERLIN, May 12 (Reuters) – Pressure on Europe to secure alternative gas supplies increased on Thursday when Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine halted a major gas transit route, raised prices.

Russia imposed sanctions Wednesday night primarily on Gazprom’s (GAZP.MM) European affiliates, including Gazprom Germania, an energy trading, storage and transmission company that Germany placed in trust last month to secure supply. read more

It also imposed sanctions on the owner of the Polish part of the Yamal-Europe gas pipeline that transports Russian gas to Europe.

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Kremlin spokesman Dmitry Peskov said there can be no relations with the affected companies nor can they participate in the supply of 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.

Germany, Russia’s main customer in Europe, said some Gazprom Germania subsidiaries were not receiving gas due to sanctions but are looking for alternatives.

“Gazprom and its subsidiaries are affected,” German Economy Minister Robert Habeck told the lower house of the Bundestag. “This means that some of the subsidiaries do not get more gas from Russia. But the market offers alternatives.”

The list also includes Germany’s largest gas storage facility in Rehden in Lower Saxony, with 4 billion cubic meters of capacity and operated by Astora, as well as Wingas, a trader supplying local industry and utilities. .

Wingas has said it would continue to operate but would be exposed to shortages. Rivals Uniper (UN01.DE), VNG (EBKG.DE) or RWE (RWEG.DE) could be potential sources of supply to the market. Russian gas flows to Germany continue through the Nord Stream 1 pipeline under the Baltic Sea.

If the sanctioned companies are unable to operate, other companies, such as gas utilities, could take over the contracts, likely involving agreeing new terms with Gazprom, including payment, said Henning Gloystein, director of Eurasia Group.

“This may be what Gazprom intends here, beyond also sending a signal of retaliation (for EU sanctions),” he added.

TRANSIT

Gazprom said it would no longer be able to export gas through Poland through the Yamal-Europe gas pipeline after sanctions against EuRoPol Gaz, which owns the Polish section.

The pipeline connects Russian gas fields on the Yamal Peninsula and Western Siberia with Poland and Germany, via Belarus, and has a capacity of 33 billion cubic meters (bcm), about a sixth of Russia’s exports. Russian gas to Europe.

However, gas has been flowing east through the pipeline from Germany to Poland for some weeks, allowing Poland, which was cut off from Russian supply along with Bulgaria last month for refusing to comply with a new mechanism. payment, accumulate reserves.

Outflows into Poland at the Mallnow measurement point on the German border stood at 9,734,151 kilowatt hours per hour (kWh/h) on Thursday, down from about 10,400,000 kWh/h the previous day, as shown by data from the gas pipeline operator Gascade.

Germany’s Habeck said Russia’s measures appeared designed to raise prices, but the expected 3% drop in Russian gas deliveries could be offset in the market, albeit at a higher cost.

Dutch gas prices at the TTF hub, the European benchmark, rose as much as 20% on Thursday but soared over the past year, increasing the burden on households and businesses.

Although German gas storage is 40% full, it is still low for the time of year and inventories need to be built up in preparation for winter.

WINTER

Moscow’s sanctions came just a day after Ukraine halted a gas transit route, blaming interference by occupying Russian forces, the first time exports through Ukraine have been disrupted since the invasion. read more

The Sokhranovka gas transit point will not be reopened until kyiv gains full control of its pipeline system, the head of the operator GTSOU said, adding that flows could be redirected to the Sudzha alternative transit point, although Gazprom has said that this is not so. technologically possible. read more

Ukraine’s gas transit system operator said Gazprom had booked 65.67 million cubic meters of capacity through the Sudzha entry point for Friday, down from 53.45 cubic meters on Thursday.

While the European Commission said Ukraine’s suspension does not present an immediate gas supply problem, there are concerns in the market about winter, when heating demand will rise and global supply restrictions will hit. read more

“Storage levels are currently sufficient to last most of 2022, even if Russian flows were to stop instantly, barring unexpected weather events, but the outlook for winter 2022 supply is now much more pessimistic,” said Kaushal Ramesh. , senior analyst at consulting firm Rystad Energy.

Finnish politicians have been warned that Russia could stop gas supplies to neighboring Finland on Friday, the Iltalehti newspaper reported, citing unnamed sources. read more

Confusion also remains among EU gas companies over a payment plan decreed by Moscow in March that the European Commission has said would breach EU sanctions.

Germany’s top power producer RWE (RWEG.DE) expects Berlin to clarify soon whether payments for Russian gas can be made under Moscow’s proposed scheme, its finance chief said on Thursday, as the date nears. limit at the end of the month.

Russia’s demand for payment in rubles has been rejected by most European gas buyers due to the details of the process, which requires the opening of accounts with Gazprombank, fueling fears about possible supply disruptions and their consequences of powerful for Europe and, in particular, Germany, which depends heavily on Russian gasoline.

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Reporting by Joseph Nasr and Markus Wacket in Berlin; Additional reporting by Christoph Steitz and Vera Eckert in Frankfurt, Nora Buli in Oslo, Marek Strzelecki in Warsaw, Thomas Balmforth in kyiv, Kate Abnett in Brussels; Written by Nina Chestney Edited by Edmund Klamann, Kirsten Donovan

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