European gas prices rise as Russia halts via key Ukraine route

European natural gas prices rose after Russian transit flows through a key entry point in Ukraine were halted as the war disrupted physical supplies of the fuel.

The benchmark contract gained as much as 6.8 percent at open.

Ukraine’s gas operator said late Tuesday it would stop delivering the fuel to the Sokhranivka gas metering station at 7 a.m. local time because it could not control the infrastructure in the occupied territories.

Russian gas giant Gazprom rejected the Ukrainian grid’s proposal to move supplies to the other entry point, Sudzha.

The development marks the first time that the war in Ukraine has disrupted gas supplies to Europe.

Russian gas flowed normally through both entry points despite the conflict, albeit at lower rates than the transit agreement provides for most of the time.

Sokhranivka, called Sokhranovka in Russian, handles about a third of Russia’s gas flows entering Ukraine.

The rest pass through Sudzha station, further away from the occupied territories in eastern Ukraine.

The gas transmission system operator of Ukraine said the occupiers made it impossible to fulfill the obligations at the connection point and at the first compressor station on the pipeline route in Ukraine.

As a result, the network has declared force majeure, meaning it is unable to make deliveries for reasons beyond its control.

A Gazprom spokesman confirmed that it had received a communication from Ukraine but no confirmation of force majeure.

Orders through Sudzha are set at 72 million cubic meters for Wednesday, higher than Tuesday but still below the nominations for both stations on the day, the grid said.

Flows via Ukraine to Slovakia’s Velke Kapusany, the main transit route to Europe, will also fall 18 percent, to the lowest level since April 30, according to grid data.

Benchmark gas prices were trading 2.9 percent higher at 101.68 euros per megawatt-hour as of 8:11 am in Amsterdam. European gas prices rise as Russia halts via key Ukraine route

Fry Electronics Team

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