Gazprom makes slow start to raising European gas supplies

Gazprom said yesterday it had “determined the volumes and routes for transporting the gas” to four sites in Germany and one in Austria, without adding any further details. Putin had promised the group would this week start filling some of its depleted storage sites in Europe after it let volumes of gas there fall to unusually low levels. The move is the first tentative sign Russia may increase exports to western Europe as soaring gas prices have pushed the region to the brink of a fullblown energy crisis. Some European lawmakers have blamed the problems on Moscow limiting supplies. An unusually cold winter, a drop in wind power generation and high demand for liquefied natural gas in Asia have left European consumers hoping for help from Russia, which provides 40 per cent of the continent’s gas. But markets reacted tepidly after it became clear Russia would not increase supply volumes enough to stave off worries that even a slightly colder winter than expected could create gas shortages in Europe. The European benchmark contract was down only 1 per cent in early afternoon trading yesterday to 77.75 per megawatt hour, while the UK contract for December delivery slipped almost 3 per cent to £1.97 per therm. Prices fell further later in the session after Gazprom booked additional pipeline capacity through Ukraine, allowing it to boost exports further, although still by a relatively small amount. “The market must be assuming these bookings continue to rise,” said James Huckstepp at S&P Global Platts. Other analysts agreed there was still reason for caution, with Russian exports to western Europe still lower than last year. “It’s a start, but the volumes delivered [from Gazprom] so far are underwhelming and not nearly enough to significantly lower prices,” said Tom Marzec-Manser at ICIS, a consultancy. “On both the Polish and Ukrainian routes, Gazprom is still delivering below their booked capacity — they are sending more than the very low levels in September and October but it’s still nowhere near comparable to 2020 or 2019.” Putin had ordered Gazprom to start filling its European storage facilities by this week after it finished stocking Russian inventories. But the Russian leader has said any further gas supplies would have to come via the controversial Nord Stream 2 pipeline, which bypasses traditional transit routes via Ukraine to supply Germany through the Baltic Sea. Moscow has denied claims by some European policymakers that Gazprom was exacerbating the gas crisis by limiting export volumes to speed the pipeline’s regulatory approval, which is not expected before the end of the year. Additional reporting by Nastassia Astrasheuskaya in Moscow