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Europe Gas: Prices rise amid Ukraine-Russia conflict, supply disruption fears

British and Dutch gas prices jumped on Monday morning amid escalating sanctions against Russia over its invasion of Ukraine and fears of supply disruption.

At the weekend, Western nations unveiled harsh sanctions including blocking some banks from the SWIFT international payments system. Russian President Vladimir Putin put Russia’s nuclear deterrent on high alert in the face of a barrage of Western reprisals.

In the Dutch gas market, the front-month contract rose by 24% to 115 euros per megawatt hour (MWh) by 0903 GMT and the April contract TRNLTTFMc2 was 25% higher at 115.05 euros/MWh.

In the UK gas market, the March price TRGBNBPMH2 was up 22% at 275.50 pence per therm and the winter 2022 price rose by 19% to 270 p/therm.

Traders said there are concerns about Russia stopping gas supply to Europe.

But Gazprom said it was shipping gas to Europe via Ukraine in line with customers’ requests.

Another Russian pipeline, the Yamal-Europe route via Belarus and Poland, switched back into reverse mode on Sunday morning and continued delivering gas eastward to Poland from Germany at elevated levels on Monday morning, data from German network operator Gascade showed.

Gas is flowing normally from Russia, a spokesperson for Germany’s largest power producer RWE, which also receives gas from Gazprom, said on Monday.

“Yes, Russian flows have continued to increase. But the market is now wondering if this will last,” said analysts at Engie Energyscan.

“While some Russian banks – including Gazprombank, which services large oil and gas payments – have escaped full blocking sanctions, the time it takes to switch to new systems would still mean major disruptions to flows,” they added.

Rystad Energy said a potential gas supply disruption from Russia could impact around 52 billion cubic metres (bcm) of pipeline supplies to Europe this year.

Germany signalled a U-turn in key energy policies on Sunday, floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas, which accounts for half of Germany’s energy needs.

The European Union benchmark carbon price was down 6.6% at 82.33 euros a tonne.

Oil tops $100, gas, grains, metals spike as Russia invades Ukraine
Source: Reuters (Reporting by Nina Chestney)

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