© Financial Eye.
By Geoffrey Smith
Financial Eye — European gas prices rose again on Tuesday after Russian gas monopoly Gazprom (MCX:) said it will cut transit supplies through Ukraine from next week.
Gazprom said the measure was a response to Ukraine failing to transport gas shipments to Moldova, by most measures the poorest country in Europe.
The pipeline that passes through Moldova and Romania en route to Bulgaria is the only one still carrying meaningful volumes of gas to European Union countries, since Gazprom suspended shipments through the Nord Stream 1 pipeline and through its trunk pipeline to Slovakia earlier this year. While it doesn’t yet represent a full shut-off of all shipments, it is consistent with widespread expectations in Brussels and other European capitals that Russia – which was the EU’s biggest supplier before it invaded Ukraine in February – will not supply any natural gas to the bloc this winter.
Gazprom and Ukraine have a long history of disputes over transit shipments, after years of illegal siphoning by Ukrainian companies in the 1990s that was initially tolerated by Moscow as a price for keeping influence in its neighbor. From 2005, however, when the country first voted to move significantly toward the EU, Russia has taken a stricter approach.
In all, Gazprom said, over 52 million cubic meters of gas destined for Moldova are currently trapped in Ukraine, over a full day’s supplies to Moldova.
Moldovan President Maia Sandu told delegates at a conference in Paris on Monday that her country, which is in the early stages of a process to join the EU, faces “an acute energy crisis” that could “jeopardize our social peace and security.”
Benchmark prices for northwest Europe were little changed by Gazprom’s announcement, which will hardly change Europe’s overall gas balance in the near term. By 07:55 ET (12:55 GMT), the front-month contract was up 1.2% at €117.5 a megawatt-hour.
Source: Live Mint