Gas Supply In Europe Under Extreme Pressure Following Russian Sanctions

Europe’s gas supply crisis grows after Russia imposes sanctions – Reuters

Russia imposed sanctions on European subsidiaries of state-owned Gazprom and Ukraine cut off a significant gas transit route, increasing pressure on Europe to secure alternative gas supplies. They targeted Gazprom’s European subsidiaries and the owner of the Polish part of the Yamal-Europe pipeline in response to sanctions imposed on Russia for its invasion of Ukraine.

Germany said some Gazprom Germania subsidiaries were not receiving gas from Russia because of sanctions.

Germany’s most extensive gas storage facility, Astora, and trader Wingas are among those facing shortages, but Russian gas flows to Germany continue via the Nord Stream 1 pipeline.

If sanctioned firms cannot operate, other companies may take over contracts, likely involving new terms with Gazprom.

Gazprom said it would no longer be able to export gas through Poland via the Yamal-Europe pipeline after sanctions against EuRoPol Gaz, which owns the Polish section. However, gas has been flowing eastwards through the pipeline from Germany to Poland for some weeks.

Dutch gas prices rose by 20%, and German gas storage is still low.

Ukraine’s gas transit system operator said Thursday that the Sokhranovka transit point would not be re-opened until Kyiv obtained complete control over its pipeline system.

The European Commission said the Ukrainian suspension of gas supplies does not pose an immediate supply issue, but winter heating demand will rise, and global supply constraints will bite.

There is confusion among EU gas companies over Moscow’s proposed payment scheme, which would breach EU sanctions. Germany’s top power producer expects Berlin to clarify the matter soon.

Natural gas prices have seen an almost 20% increase in world markets since the war between Russia and Ukraine started.

The Biden Administration had promised to supply Europe with liquid natural gas. However market experts commented that the inventory and infrastructure to replace supplies from Russia to the European continent do not exist. Nor do we have a practical or cheap way to get those supplies to Europe. Further it would take at least five years to build that capacity out.

To read more about this, check out these sources:

  1. Europe’s gas supply crisis grows after Russia imposes sanctions  Reuters
  2. Natural-Gas Prices Soar in Europe After Russia Sanctions Energy Companies  The Wall Street Journal
  3. Europe faces gas supply disruption after Russia imposes sanctions  Al Jazeera English
  4. Russia puts sanctions on Gazprom units in Europe and U.S., part owner of pipeline  Reuters
  5. Russia Bans Gas Flows to Europe Through Key Yamal Pipeline  Bloomberg
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