Russia threatens to restrict gas flows going to western Europe via Ukraine

Russia has threatened to restrict gas supplies to western Europe through the only pipeline still connecting the regions, warning that it could lower flows through Ukraine from next week.

Gazprom, the state-backed Russian gas pipeline monopoly, accused Ukraine on Tuesday of taking gas meant for Moldova from lines running through the country, and warned that it may reduce supplies from November 28.

While the Russian flows going to Moldova only make up a small percentage of those transiting Ukraine, any threat to the last remaining pipeline route to western Europe is likely to unsettle energy markets as winter starts.

Any loss of supplies through Ukraine could still unsettle energy markets, however, as governments and traders believe Europe needs more than the gas it holds in storage to meet heating and industrial demand through the winter.

Tom Marzec-Manser of energy consultancy ICIS said that while Gazprom’s threat was, for now, only to Russian volumes going to Moldova through Ukraine, traders were likely to worry it could be the precursor to further cuts.

Large-scale Russian supply reductions have often originated with threats to reduce volumes by a small amount initially, while the accusation of Ukraine diverting supplies echoes the gas crisis of 2009, when Russia ultimately slashed flows to Europe in response.

“The industry has long feared that Russia could threaten the remaining flows to western Europe via Ukraine this winter,” Marzec-Manser said. “We’ve seen in the past that small cuts in supply can become bigger cuts very quickly, and Europe is not out of the woods yet in terms of gas supplies during the coldest months.”

Russia has been accused of “weaponising” its gas supplies to Europe in retaliation for western support for Ukraine. Since Moscow’s full-scale invasion in February it has closed all but one of the pipelines going to western Europe, including those bypassing Ukraine such as Nord Stream 1. Supplies have been slashed to little more than 10 per cent of the level before the invasion, stoking a cost of living crisis across the continent.

The European gas benchmark, TTF, rose as much as 4 per cent on Tuesday to €120 a megawatt hour.

Prices spiked in August to more than €300 a megawatt hour — the equivalent of more than $500 a barrel in oil terms — as Russia severed supplies through its largest route to western Europe, the Nord Stream 1 line to Germany.

But while prices remain historically high, they have eased in recent months after Europe filled its gas storage sites to near capacity while the mild autumn weather delayed the start of the heating season.

Gazprom said that Ukraine had “accumulated” about 52mn cubic metres of gas — equivalent to slightly more than one day’s supply through the pipeline — over an unspecified period it said was meant for Moldova.

About 43mn cubic metres of gas have been transiting through Ukraine from Russia to western European markets each day in recent weeks through the remaining pipeline.

Moldova has been storing some of its gas in Ukraine ahead of the coldest winter months, analysts have said, and Ukraine rejected Gazprom’s allegations on Tuesday.

The Gas Transmission System Operator of Ukraine said in a statement that Gazprom was specifically trying to block use of a recently launched reverse flow mechanism at the Moldovan-Ukrainian border that allows gas to be pumped in both directions.

“This is not the first time Russia has resorted to using gas as an instrument of political pressure,” said Olga Bielkova, GTSO’s director of government and international affairs. “It manipulates facts to justify its decision to limit further the volume of gas supplies to European countries.”

Gazprom said that the reduction in volumes would be equal to the “under delivery” from Moldova to Ukraine but indicated it would continue the rest of its normal gas flows to the country.

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