A much-anticipated pipeline capacity auction held on Monday, which traders were watching for evidence of an increase in supplies, showed no increase from Russia, either through the Ukrainian pipeline or lines passing through. Poland to northwestern Europe.
« [The auction results were] same as last month, so expect stable flows for November, ”said Tom Marzec-Manser of CIHI, a consulting firm.
The benchmark European gas contract for November delivery jumped 17.7% to € 104 per megawatt hour, while the equivalent UK contract jumped more than 15% to £ 2.71 per therm.
Putin and Kremlin officials have hinted in recent weeks that more gas could be delivered to Europe as it grapples with a record spike in gas prices that threatens economic recovery from the pandemic.
Russia has been accused of suspending supplies to bolster its support for the acceleration of the start-up of the Nord Stream 2 gas pipeline which will bypass Ukraine to deliver gas directly to Germany via the Baltic Sea.
Putin last week denied that he had made politics with Europe’s gas supply, insisting that Gazprom had already exceeded its contractual obligations to customers on the bloc.
Accusations that Gazprom was using energy as a “weapon” to speed up approval of Nord Stream 2 were “politically motivated profanity,” he said, while conceding that approval of the new pipeline could mitigate lack of energy in the EU.
Continental Europe gets more than a third of its total gas supply from Gazprom, but a long winter 2020-21 has depleted storage facilities in Russia and the EU to low levels.
Russian Deputy Energy Minister Evgeny Grabchak said last week that Gazprom would continue to fill national storage facilities until November 1, an earlier sign that Russia was in no rush to divert more supplies to Europe.
At the same time, increased demand for liquefied natural gas in Asia has increased global competition for LNG cargoes, making it more difficult and costly for the UK and EU countries to compensate for reluctance to Russia to fill the void. The UK imported nearly 20% of its gas in 2019 via LNG shipments.