Page 8 - EurOil Week 04 2022
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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
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