Gazprom has resumed gas supplies to Europe through Ukraine, booking 109 million cubic meters of daily pipeline capacity, Bloomberg reported on Tuesday. Under the five-year contract, which expires in 2024, the company is expected to deliver 40 billion cubic meters of gas per year to Europe via Ukraine. The news triggered a long-anticipated decline in gas prices, with March futures dropping below $900 per thousand cubic meters.
January sales of Russian natural gas outside the former Soviet Union saw a massive drop of 41.3% year-on-year, while the country’s overall production has increased, Russian energy major Gazprom reported on Tuesday.
European inventory levels have reportedly sunk to historic lows over the past several months, sending energy prices in the region soaring, while some EU officials are accusing Gazprom of deliberately withholding supplies. However, Gazprom says additional supplies were not booked before February 2.
“The Company’s gas deliveries are carried out as requested by consumers in full compliance with contractual obligations,” Gazprom said in a press release.
Gazprom said earlier this month it hadn’t booked any monthly transit capacity via the Yamal-Europe gas pipeline for February. However, the company may still book the route via daily auctions.
The pipeline, which usually accounts for about 15% of Russia’s annual gas exports to Europe and Turkey, has been working in reverse mode since late December, putting additional pressure on European energy prices.
Meanwhile, working gas inventories in Europe’s underground gas storage facilities were lagging behind last year’s level by 27.2% as of January 30, Gazprom said on Tuesday, citing data from Gas Infrastructure Europe.
Over 81% of the fuel delivered during the summer is already pumped out from the facilities, according to the company, while “the total amount of working gas inventories in European UGS facilities was as low as 38.1 billion cubic meters on January 30, falling by 2.7 billion cubic meters below the historical minimum for this date.”
Separately, data of the booking platform seen by Reuters confirmed that Gazprom was set to resume westbound gas flows from Poland to Germany this week via the Yamal pipeline, restoring the normal flows after the route was reversed. Moreover, data from German network operator GASCADE reportedly confirmed the expectations for renewal of the westbound flows for eight hours initially.
Brussels and Washington have repeatedly raised concerns over potential disruptions in Russian energy supplies in response to sanctions the US and its allies are threatening to impose on the country in the event of a military assault on Ukraine. The Russian government denies having plans to invade the neighboring state, accusing the West of ramping up tensions through its provocative rhetoric.
European officials have protracted the certification of Russia’s Nord Stream 2 gas pipeline, which could have alleviated the energy shortages on the continent.
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