European Gas Market on Edge as Russia Keeps Grip on Supply
(Bloomberg) -- Russia kept Europe’s energy markets on edge after Gazprom PJSC declined to book more pipeline capacity later this winter when freezing temperatures will buffer the region.
While President Vladimir Putin has said his country is ready to deliver all of the gas that Europe needs, especially when demand peaks, Gazprom didn’t reserve any extra capacity to send fuel to Europe in the first quarter next year via Ukraine and Poland, according to the results of several capacity auctions on Tuesday.
It can still book those capacities at forthcoming monthly sales, although allocations and actual flows have been limited since September in what is seen as a contributing factor in Europe’s gas supply squeeze. That prompted accusations from some in Europe that the country is using the region’s energy crunch to advance approval for the contentious Nord Stream 2 pipeline to Germany.
The first quarter, when gas consumption typically increases, will be key for Russia as it seeks to start Nord Stream 2 and re-direct at least some transit flows to the link.
European benchmark gas futures edged higher, with front-month Dutch contracts up about 3% to 67.50 euros a megawatt-hour by 12:26 p.m. in Amsterdam. The contract hit a record 162.13 euros in early October at the height of Europe’s energy crisis.
In a series of auctions on Tuesday, Gazprom didn’t book any of the 9.8 million cubic meters a day of pipeline capacity offered at Sudzha, and none of the 5.2 million cubic meters a day available at Sokhranovka -- both points on the border between Russia and Ukraine.
None of the gas capacity to send gas to Germany via the Mallnow compressor, where Russia’s Yamal-Europe pipeline ends, was booked at auctions.
It was the same result at auctions for the second and the third quarter of 2022.
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