Gas prices surge after Russia refuses to supply more to Europe

RUSSIA opted against supplying more gas to Europe yesterday, sending prices rocketing again as it put further pressure on Germany to sign off on the Nord Stream 2 pipeline.

Gazprom, the Kremlin-controlled gas giant, refrained from booking extra volumes for gas transit via Ukraine for next month at an auction that traders watched for signs of increased supply.

The news sent wholesale gas prices in the UK and Europe up 18 per cent.

It came shortly after Nord Stream 2 announced that the first of the project’s two lines from Russia to Germany had been filled with technical gas and was ready to go, pending German approval. The moves fuelled further speculation that Moscow is contributing to the gas supply crunch in order to force through approval of Nord Stream 2, which has divided European opinion and faced resistance from the United States.

Critics say the pipeline is a way to punish Ukraine for the conflict that began in 2014. Ukraine is a major gas transit hub and could become obsolete once Nord Stream 2 is fully operational.

Vladimir Putin last week said Russia stood by its commitments to send gas through Ukraine at least until 2024 but he suggested that the shabby state of the pipeline could potentially cause disruptions. Global gas prices hit record highs earlier this month as markets grappled with an unexpectedly large demand from recovering economies amid a limited supply of gas.

Gazprom, which is majority stateowned, yesterday indicated that it was prepared to help Europe out – but only on its terms. The Russian gas monopolist said in a statement that the first branch of Nord Stream 2 has now been tested and is viable: “There is enough pressure in the pipeline to start gas transit in future.”

Russia has said it has limited capacity to respond to a growing demand for gas in Europe because its own domestic consumption is at a record high due to the cold autumn.