Gas prices rose amid concerns that Russia may cut off supplies to Europe via Ukraine, adding to the disruption caused by damage to Nord Stream pipelines under the Baltic Sea.
The Kremlin-controlled gas company Gazprom said it may impose sanctions on Ukraine’s Naftogaz due to ongoing arbitration.
The statement came after leaks were discovered on two Nord Stream gas pipelines under the Baltic Sea near the Danish island of Bornholm in a suspected act of sabotage, although it was not confirmed who or exactly why.Read:Overlooked by Investors, Royalties Are Fetching Princely Sums
The price of Dutch gas for delivery next month – the European standard – rose by €16.10 to €200.1 per megawatt-hour (MWh) on Wednesday and the British equivalent rose by 24.75 points at 290.25ppi.
Gazprom said it rejected all claims made by Naftogaz in the arbitration proceedings on the transportation of Russian gas and informed the arbitration court. It also said Russia could impose sanctions on Ukraine’s energy company, which would prevent Gazprom from paying transit fees to Kyiv if it files an arbitration case over gas transportation.Read:The best cruise ship of the year is a ‘winner for Brits’ – full list of cruise winners | Cruise | Travel
Russian gas travels to Europe via Ukraine via several major routes, including the Muslim Brotherhood, Soyuz and Yamal-Europe pipelines. Transgas, which starts in western Ukraine and flows into Germany, may also be affected.
The flow of Russian gas through Ukraine has been steady at around 42 million cubic meters per day in recent weeks. Gas prices have already been pushed higher this week on the back of the surprising news of leaks in Nord Stream pipelines.
However, although Nord Stream 2 contained the gas, it never commenced commercial operation, while flows through Nord Stream 1 have been halted since late August, limiting the immediate impact of the damage. Flows through those routes are now seen as unlikely to return.
Denmark and Sweden said the large leaks on the pipelines in the Baltic Sea were caused by deliberate acts of sabotage carried out in each of the countries’ exclusive economic zones. A Western official told Reuters: “Multiple bombings at the same time – they are very serious and will have to be investigated.”
Norway’s Equinor, Europe’s largest gas supplier, said on Wednesday it had beefed up security at its facilities after suspected sabotage.Read:New Mercedes-AMG A45 S starts at £63k
The Kremlin said allegations that Russia was behind a possible attack on Nord Stream gas pipelines were “as foolish as expected”.
Analysts at Refinitiv said the impact of the current cold wave in the UK has been mitigated by increased Norwegian flows and imported LNG supplies from around the world. However, the depreciation of the pound against the dollar will increase the cost of buying gas in dollars for British importers.
The rise in gas prices came after weeks of falling in its price, buoyed by an improving picture for European supplies this winter due to efforts to fill storage facilities. However, industry watchers worry that by next spring European gas facilities may be nearly empty without any Russian gas to fill up.