European natural gas soars over supply disruptions as Ukraine blocks key route and Russia retaliates against sanctions
natural gassurged by over 10% on Thursday after Ukraine stopped flows of Russian gas.
- Benchmark Dutch
gasfutures rose to one-week highs, after Ukraine said it had stopped gas flowing through its pipelines.
European natural gas prices surged on Thursday after Ukraine stopped Russian fuel flowing through the pipelines across its territory.
ICE Dutch natural gas futures soared 14.2% to 107.40 euros per megawatt hour ($112) after Ukraine blocked a key transit route that carries Russian gas to Europe on Wednesday and blamed interference by Moscow's troops. The route provided about 8% of Russia's gas to Europe, according to Reuters.
In response, Moscow sanctioned the Poland-controlled part of the Yamal natural gas pipeline and the Germany-controlled part of Gazprom and several of its subsidiaries. Gazprom itself stopped supplies to Poland in April.
Russian gas requests via Ukraine have also fallen as deliveries reduce. Gas flows through Ukraine could drop more than 27% on Thursday from the previous day, Bloomberg said. Data from pipeline operator
Natural gas pipelines through Ukraine provide about 30% of overall Russian gas to Europe, with pipelines through Germany also supplying a significant amount, according to commodity strategists at SEB.
Europe relies on Russia for about 40% of its gas, with Germany being the biggest user. Some EU member states rely on Russia for 100% of their gas needs. The EU is looking to reduce its reliance on Russian gas as the escalating war has highlighted the need for alternative supplies and fuel sources.
However, the EU's current plans to shift away from Russian natural gas are expected to cost it more than an additional $200 billion by 2030. According to US government data, the EU accounts for 89% of all Russia's gas exports.
"Decades of over-reliance on fossil gas has made Europe incredibly vulnerable to volatile prices whilst empowering Putin," Tara Connelly, Senior Gas Campaigner at Global Witness said in a statement on Wednesday.
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