European gas prices jump after Gazprom warns it could cut its last flows to Europe, amid worries about apparent Nord Stream sabotage
- European natural gas futures rose 11% Wednesday as investors assessed two new risks to pipeline flows.
- Russia’s Gazprom warned it may cut supplies via Ukraine, the last link still delivering its gas to Europe.
Russia’s state-run energy giant Gazprom has warned it could cut flows of natural gas to Europe via Ukraine, its last link still delivering to buyers in western Europe.
Meanwhile, questions are building over whether recent damage to the Nord Stream pipelines, which are leaking natural gas into the Baltic Sea, was caused by deliberate acts of sabotage.
European natural gas benchmarks jumped above 200 euros ($191.56) early Wednesday due to worries about the risks to gas supplies to Europe. The region is already facing an energy crisis after Russia choked off flows via the key Nord Stream 1 pipeline.
Dutch TTF natural gas futures, the European benchmark have fallen back after topping 200 euros for the first time in almost two weeks. They last stood at 198 euros, up 6.4%, on the ICE index.
Gazprom and Ukrainian company Naftogaz are facing off in a legal dispute over pipeline gas deliveries, which is prompting worries about further cuts to gas flows to Europe.
Naftogaz, which organizes the movement of Russian gas to Europe via pipeline, has accused Gazprom of failing to pay transit fees, but the Russian company says it won’t pay for services that haven’t been provided.
Naftogaz wants the dispute to be settled in Switzerland — which Gazprom said is “unfriendly” to Russia, given it backs western sanctions over the Ukraine war. It said Moscow could sanction the Ukrainian company if it pursues the case.
“In practice, this will mean a ban on Gazprom from fulfilling obligations to sanctioned persons under completed transactions, including financial transactions,” it said in a statement via Telegram on Tuesday.
Repeated supply interruptions since Russia invaded Ukraine have caused European natural gas prices to soar this year. Dutch TTF futures climbed as high as 350 euros ($335) in late August and have now jumped 135% year-to-date.
Investors meanwhile were monitoring developments after recent damage to the Nord Stream 1 and Nord Stream 2 pipelines, which are leaking natural gas into the Baltic Sea. Images released by the Danish military Tuesday showed huge amounts of gas erupting out of the sea in northern Europe.
The US is supporting efforts to investigate the “apparent sabotage” of the Nord Stream pipelines, a national security advisor said, while two senior German lawmakers have pointed the finger at Russia.
The US Central Intelligence Agency warned Germany weeks ago about potential attacks on Nord Stream, German magazine Der Spiegel reported Tuesday.
Denmark’s prime minister said that the gas leaks were likely a result of deliberate sabotage, and the US has agreed to co-operate with her investigation into the damaged pipelines.
“It is now the clear assessment by authorities that these are deliberate actions. It was not an accident,” Mette Frederiksen said at a press conference Tuesday. “There is no information yet to indicate who may be behind this action.”
