European gas prices increase as Russia threatens to restrict flows

RUSSIA has threatened to deepen Europe’s fuel crunch by cutting what remaining gas supplies are flowing to the continent next week.

European natural gas futures jumped as much as 4.5pc yesterday after the Russian gas exporter Gazprom signalled it would curtail supplies.

The threat came as Gazprom alleged that some of its gas meant for Moldova was being kept in Ukraine.

A pipeline through Ukraine is the last remaining source of Russian gas to western Europe following a progressive squeeze on supplies orchestrated by Moscow and beginning even before the outbreak of war. Gazprom warned it will limit transit volumes from Nov 28 corresponding to the amount of gas that does not reach Moldovan customers. Ukraine’s gas transmission system operator contradicted Gazprom, saying that all volumes of Moldova-bound gas received at the Sudzha cross-border point in the north of the country were transmitted on. The threat to cut gas supplies

further comes as temperatures drop, with forecasts suggesting they will dip below seasonal norms at the turn of next month.

This will increase demand for fuel across Europe as people heat their homes and businesses. Russian gas supplies to Europe are already at a fraction of levels seen in previous years, with major routes except the Ukraine link shut. There are concerns in Europe that the issue with Moldova may be the beginning of a complete shutdown.

Disputes over contractual clauses and regulation have been a feature of the meltdown in economic ties between Russia and the West. Russia is also suspected of sabotaging the Nord Stream pipeline. A winter without any Russian gas would be a challenge for Europe, even with many gas storage sites close to capacity.

Separately yesterday, details emerged of the European Commission’s plans for a regional price cap. Brussels proposed an emergency cap in an effort to avoid the kind of record highs seen in August. The drafted regulation seeks a cap level of €275 (£238) per megawatt-hour, well above current levels, but below the spikes suffered in the summer.