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RUSSIA KEEPS GRIP ON EUROPE’S GAS MARKET DESPITE PUTIN’S PLEDGE

Russian President Vladimir Putin promised Europe more gas starting on Monday. So far, there are no signs the continent will get any relief. German gas orders via a key Russian pipeline signaled a very small increase in shipments on Monday, while no extra capacity to send additional supplies to Europe was booked in auctions on Sunday. That’s a disappointment for traders who had been counting on Gazprom PJSC to follow Putin’s orders to ease the continent’s supply crunch. Natural gas prices have more than tripled this year as Europe started the heating season with the lowest inventories in more than a decade. Russia had been keeping supplies capped, but traders were…

German gas orders via key Russian pipe show no sign of relief.

 

By Anna Shiryaevskaya and Elena Mazneva

November 7, 2021

Bloomberg

 

Russian President Vladimir Putin promised Europe more gas starting on Monday. So far, there are no signs the continent will get any relief.

German gas orders via a key Russian pipeline signaled a very small increase in shipments on Monday, while no extra capacity to send additional supplies to Europe was booked in auctions on Sunday. That’s a disappointment for traders who had been counting on Gazprom PJSC to follow Putin’s orders to ease the continent’s supply crunch.

Natural gas prices have more than tripled this year as Europe started the heating season with the lowest inventories in more than a decade. Russia had been keeping supplies capped, but traders were hoping for relief after Putin ordered Gazprom to send more gas to Europe from Nov. 8, when domestic storage sites were set to be full.

German gas orders via the Yamal-Europe pipeline for delivery into the Mallnow compressor station on Monday were still below Thursday’s levels and just about a fifth of normal, according to Gascade data. While actual flows may differ, the data is the first sign that Russia may be keeping its grip on European gas markets.

“If Russia does what Putin said they will do, then there will be a big relief,” Frank van Doorn, head of trading at Vattenfall, said in an interview at the Flame gas conference in Amsterdam last week. “If there is no additional gas coming on Monday, we could see a significant price spike.”

Another sign that Europe won’t see any relief on Monday is the result of a series of auctions for pipeline capacity. Gazprom didn’t book any of the space offered at the Sudzha and Sokhranovka entry points on the border between Russia and Ukraine. No extra capacity was booked either for the Mallnow station in Germany, which handles Russian gas through Belarus and Poland.

Shipments through those routes have been far below capacity so far this month. To make matters worse, some Russian gas was flowing from Germany eastward to Poland for the second time since last weekend, the reverse of the normal direction.

To be sure, Gazprom can still book more capacity at forthcoming daily auctions, as well as offer additional volumes at its Electronic Sales Platform on Monday.

European prices, which eased since peaking about a month ago, could spike again on Monday. Without the volumes promised by Putin, there’s concern the market could soar again, with storage levels on the continent well below normal as the winter heating season gets underway.

— With assistance by Vanessa Dezem