The decision marks the end of a 2019 contract between Gazprom, the Russian state gas giant, and several European countries, including Slovakia, Moldova and Hungary, through a network of gas pipelines on Ukrainian soil, which continued to operate despite the invasion. by Russia
Russian state giant Gazprom will cut gas supplies to Europe through Ukraine as early as Wednesday, the sector’s national regulator confirmed this Tuesday, making an increase in current prices almost certain.
According to the French news agency, France-Presse (AFP), GTSOU posted on its website a forecast of zero cubic meters (m3) of distribution volume from Wednesday, January 1st, thus confirming that will cut off supplies to Europe via a route that included Ukraine.
The decision marks the end of a 2019 contract between Gazprom, the Russian state gas giant, and several European countries, including Slovakia, Moldova and Hungary, through a network of gas pipelines on Ukrainian soil, which continued to operate despite the invasion of Ukraine by Russia, in February 2022.
This Tuesday, according to AFP, the price of gas in Europe reached and surpassed the mark of 50 euros per megawatt-hour for the first time in more than a year, driven by the end of this agreement, but also by the cold winter.
After initially reaching this symbolic threshold and retreating, the Dutch TTF futures contract, considered as the European benchmark for natural gas, finally surpassed it a little later in the session.
By 15:35 GMT (16:35 in Paris), it was up almost 5% to 50,430 euros per megawatt-hour (MWh), its highest level since October 2023.
Since the invasion of Ukraine in February 2022, the EU has reduced its exposure to Russian gas, but, according to Christoph Halser, an analyst at Rystad Energy, this resource will continue to represent 14% of its total consumption in 2024, compared to 12% in last year.
In this context, “a colder winter than expected or further delays in liquid natural gas projects” could lead, in the short term, to prices of around 60 euros per megawatt-hour, according to Daniela Sabin Hathorn, an analyst at Capital. com, cited by AFP.
According to the Oxford Institute for Energy Studies, the consequences of this disruption will include an accelerated decrease in European reserves and upward pressure on gas prices.
The low temperatures recorded since the end of October have already encouraged the use of heating and the lack of sun and wind has led to a greater proportion of electricity being produced from natural gas.
According to the European Aggregated Gas Storage Inventory (AGSI) platform, average gas reserves in the European Union (EU) are around 73%, well below the 86% recorded in 2023.
