Page 8 - EurOil Week 04 2022

EurOil COMMENTARY EurOil

European gas prices spike on

Ukraine-Russia unease

Some Western officials are warning that an invasion could be imminent

EUROPE EUROPEAN natural gas prices spiked on Jan- with their Russian counterparts in recent weeks
uary 24, amid heightened fears of an imminent to find a resolution to the crisis, but so far no
WHAT: Russian invasion of Ukraine. breakthroughs have been made.
Gas prices have surged As of 16:30 GMT, the month-ahead contract Russia meets around 40% of gas demand in
amid heightened tensions at the Dutch TTF gas hub was up 17.4%, trading Europe, and gas storage levels across the conti-
between Moscow and at €92.75 ($105) per MWh. This represents its nent are at an unusually low level at present. Data
Kyiv. highest point since early January. published by Gas Infrastructure Europe (GIE)
The rally followed announcements by the US estimates that UK and EU storage facilities are
WHY: and UK governments that they would be evac- currently only 43% full, versus an average for this
Negotiations have not uating the families of embassy workers from time of year over the last decade of 70%. A major
yielded a breakthrough. Ukraine because of the threat of a Russian attack. disruption to Russian gas flow via Ukraine could
The EU has shown more restraint, with foreign therefore have a devastating impact on Europe’s
WHAT NEXT: relations chief Josep Borrell stating that Brussels energy security, plunging the continent into roll-
If Ukrainian gas transit would not seek to “dramatise” the situation by ing blackouts and heating loss.
was disrupted, the taking such a step. Negotiations with Moscow The US Biden administration has been in reg-
options for alternative continue, he said. ular discussion with a number of countries and
supply for Europe are Gas prices have risen to record heights companies in Europe, the Middle East, North
limited, save for the over the last few months in Europe, on robust Africa and Asia about ramping up LNG supply
Groningen field. demand and a significant and unexplained to Europe in the event of a disruption in Russian
cut in Russian supplies. Tensions between shipments, CNN reported on January 24. But
Ukraine and Russia have added to the bull- the global energy market is already tight, so it
ish sentiment, owing to the risk that military is unclear what energy could be made available
action might pose to Russian gas transit via without expanding output, which in most cases
Ukraine. would take considerable time.
Russia is understood to have amassed a force A key exception is the giant Groningen gas
of more than 100,000 troops supported by tanks field in the Netherlands, where production has
at the Ukrainian border, and Kyiv says Moscow’s been capped ahead of the field’s complete closure
intent is to launch a late-January invasion of the later this year. Groningen’s phased shutdown was
country. But Moscow denies this, and recently ordered in light of the earthquakes caused by
has asserted that Ukraine is in fact preparing its production operations over the decades, but the
own incursion into the separatist regions of east Dutch government has already said it expects the
Ukraine that are supported by Russia. field to flow more gas than previously allowed in
Western officials have held a series of talks light of energy shortages facing Europe. ™

P8 www. NEWSBASE .com Week 04 27•January•2022