Russian state-controlled Gazprom has reduced transit gas supplies across Poland and Ukraine, realising industry analysts' worst expectations and sparking fresh concerns that it has no intention of improving supplies to Europe as winter approaches.
German operator Gascade initially indicated that hourly deliveries of Russian gas via the Yamal Pipeline on 1 October were seven times lower than their September peaks.
Gas supplies via this route to Germany started to decline on 28 September, breaking the growth trend that started on 7 September.
The recovery in the pace of Russian gas deliveries after a fall that Gazprom attributed to a major fire that damaged a gas and condensate processing facility in West Siberia, had partially helped to push back spot gas prices in Europe down from record highs of $1000 per thousand cubic metres.
According to Gascade, deliveries via the Yamal Pipeline peaked earlier in September at 76 million cubic metres per day or about 3.17 milllion cubic metres per hour, but dropped to just 482,000 cubic metres per hour in the early hours of 1 October.
Gazprom said earlier this week that deliveries via the Yamal Pipeline have been reduced to account for “lower nominations of one of its [European] customers”.
The drop in supplies sparked a new wave of volatility across the European gas market, where transactions hit a ceiling of $1200 per thousand cubic metres earlier on Friday.
Ukraine’s gas transmission authority, Operator GTS Ukrainy, signalled that Gazprom has already blocked gas supplies with Hungary as their final destination, also in the early hours of 1 October.
Last week, Russia and Hungary signed a new gas supply agreement, calling for the use of alternative delivery routes that bypass Ukraine, despite an outcry from Kiev.
According to Gazprom, the contract signed in Budapest on Monday calls for the supply of 4.5 billion cubic metres per annum of gas to Hungary.
Out of this amount, 3.5 Bcm will be delivered via recently commissioned TurkStream pipeline running across the Black Sea to Turkey, with an onshore pipeline link running to Hungary via Bulgaria and Serbia.
The remaining 1 Bcm is to be supplied from a gas trading hub at Baumgarten in Austria.
Operator GTS Ukrainy said Gazprom booked throughput capacity across the south of Ukraine of 24.6 MMcmd for the period between 1 October and 30 September 2022 — a so-called “gas year” according to industry terms.
Gazprom transited a total 32.6 Bcm of gas across Ukraine between January and September this year, according to the operator, with the contract calling for the Russian giant to send a minimum volume of 40 Bcm for the whole of 2021.
Industry analysts in Moscow earlier suggested that Gazprom may be prepared to pay a fixed fee for not pumping gas across Ukraine under their five-year transit agreement's ship-or-pay clause, creating technical strains for the country’s already heavily underutilised gas transmission network.
Operator GTS has acknowledged that the halt of Russian supplies to Hungary will wipe out so-called “virtual reverse” trading arrangements.
These arrangements permit Ukrainian customers to purchase Russian gas from Hungarian importers while volumes are still in transit in Ukraine.
According to data provided by Operator GTS, contrary to the temporary rise in Yamal Pipeline supplies, Gazprom’s deliveries to Europe via Ukraine fell to about 3.15 Bcm of gas in September, the lowest level against other months of this year, except February.
Some Russia watchers see these moves to encourage European Union authorities to speed up the certification of Nord Stream 2 subsea pipeline running across the Baltic Sea to Germany.
In its earlier application to the German Federal Network Agency, Nord Stream 2 wants to gain "independent operator" status, thus relieving the project from European gas market restrictions that limit Gazprom to using just half of the pipeline capacity, with the other half allocated to third party supplies.
According to the agency, the certification decision is not expected before January, though Gazprom has reportedly indicated that Nord Stream 2 will be technically capable of starting operations later this month.
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