Gas to Jump in Case of Immediate Gazprom Export Halt: Energy Aspects

In case of an immediate halt to Gazprom’s natural gas pipeline exports to Europe via Ukraine, EU natural gas prices could jump by €5-6/MWh as it poses one of the largest risks to European gas balances, Jacopo Casadei said, gas analyst with Energy Aspects, cited by Montel.

• The timing of the cut is still unclear, Casadei added.
• Former regulator head Walter Boltz said the Russian gas deliveries to Austria “will stop at some point this summer, maybe in two or three months,” according to Montel. The halt could impact supplies up to 6bcm/year, Montel added.
• “The moment Gazprom does not receive payment it is likely they’ll cut deliveries altogether,” Casadei said.
• “On paper, there is enough pipeline capacity that should be able to cover it but from energy security it really tightens the supply picture and makes Europe more reliant on LNG and Norwegian flows,” said Casadei.
• In contrast, Mauro Chavez, head of natural gas and LNG research at consultancy Wood Mackenzie, the risk of a halt in Russian flows has already been priced in.
• However, he said that there is no risk of demand curtailment in Europe, even if Russia cuts supply to Austria as it can secure supplies from other origins.
• “Gas markets could manage but not European industry. Some industries will not survive a second blow of Russian supply curtailment,” Chavez said.
• Lost Russian supplies are likely to be secured via Italy from its North African and from Germany but to a lesser extend due to the countries levy on gas exports, analysts said.
• Most of the extra supply to cover lost Russian flows would be secured via Italy from its North Africa imports due to the German levy on gas exports, and the remainder from Germany, analysts said.