Russia slashes gas supplies to Europe as temperatures fall

Over the weekend, Gazprom, Russia’s state-controlled company, decided to cut its gas supplies to Europe. It affected prices surging as the countries in Europe started to prepare for a season of low temperatures.

Interfax reported, mentioning market data, that supplies via the Yamal pipeline, running through Belarus and Poland to Germany, stood at their lowest over this weekend. On Friday, daily shipments dropped from 27 million cubic meters to 5.1 mcm and 4.6 mcm on Saturday and Sunday.

Gazprom also booked only slight additional capacity on Monday’s transit route, which is 3.9 mcm, unsettling markets as gas prices increased again in Europe.

On Monday, Gas prices rose more than $1,700 per thousand cubic meters. This is around 70% higher than the levels seen at the beginning of September. In September, European politicians first started stressing out about a potential Russian squeeze on supplies before winter.

How it operates

The full capacity of Yamal pipeline operations is 88 mcm per day. This means that flows were operating at only 4% of the total capacity on Monday.

Europe previously accused Gazprom and Russia of squeezing the European gas market to push European countries to sign long-term gas deals and run its Nord Stream 2 project. After the agreement with Gazprom, it can guarantee gas supplies at fixed prices.

The company expanded supplies to Europe in November and at the beginning of December. However, prices remained high as storage levels were low in Europe, worries of new delays to Nord Stream 2’s certification, and possible conflict in Ukraine.

Gazprom’s primary supply route into Europe and the first Nord Stream pipeline transiting through Ukraine is the Yamal pipeline. The state-run TASS news agency reported that Gazprom refused to book extra supplies through Ukraine and secured only 23%.