Page 7 - EurOil Week 05 2023

EurOil COMMENTARY EurOil

Graph showing the March 2023 TTF contract (euros per MWh). Source: ICE data.

Trading data shows that the TTF gas price loss of volumes currently transiting via Ukraine
averaged €136 per MWh between the start of to central Europe – around 27 mcm per day in
Moscow’s invasion of Ukraine and now, versus January 1-25 – could have an outsized impact on
just above €50 per MWh in the year prior to this. prices relative to the volume lost.”
“The only upside influence on Russian pipe- The institute warned that this would “dispro-
line gas flows to Europe in 2023 could be higher portionately” affect countries without access to
daily nominations by Gazprom counterparties alternative supplies such as LNG. Austria and
that currently pay in rubles,” OIES said. Slovakia are at particular risk, it said.
One of the reasons why Russian gas supply A specific risk to Ukrainian gas transit,
has fallen so far over the last year is that the besides the conflict itself, is how the Russian
Kremlin issued a decree demanding that buy- government might react to the arbitration case
ers in non-friendly countries paid for supplies of Ukraine’s Naftogaz against Gazprom over
in rubles instead of euros, as stipulated in their the coming years. Gazprom has warned that if
contracts. Some buyers refused, and had their the case continues, Naftogaz could face Russian
supply cut off. sanctions, rendering the Russian supplier unable
The good news for gas consumers is that to meet its contractual obligations.
TTF gas prices have now fallen to the level not “The implication is that, in such a situation,
seen since December 2021. But colder weather Russian gas transit via Ukraine would halt,” the
over the next month and the Chinese economic OIES said.
recovery could drive prices higher once more, as Europe had been relying on Russia for
well as a further reduction in Russian flow. around 40% of its gas supply prior to the war in
“Given the tightness of the current market, the Ukraine. ™

Russian gas export
pipelines to Europe.
Source: OIES.

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