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Explainer-Why Russia drives European gas prices -Breaking


© Reuters. FILE PHOTO : Nord Stream 2 Baltic Sea pipe is stored at the port Mukran in Sassnitz. September 10, 2020. REUTERS/Hannibal Hanschke//File Photo


By Susanna Twidale

LONDON (Reuters – European gas prices jumped by more than 30 percent on Thursday, after Russia invaded Ukraine.

Here are some reasons why Russia is so influential on Europe’s gas market, even though Russia doesn’t supply direct.


Around 40% of Europe’s reliance on Russia is due to its dependence. It is mainly transported via pipelines like Yamal (which crosses Belarus and Poland to Germany), Nord Stream 1 that runs directly through Germany, and Pipelines through Ukraine.

A network of interconnecting pipelines links Europe’s internal gas markets.

Although not all countries receive supply from Russia directly, countries like Germany that are the most dependent on Russian gas must get more elsewhere. This includes Norway. Norway has knock-on effects for gas supplies to other countries.

News about Russian supply triggers volatility in British gas prices just like in Europe. Even though Britain gets less than 5 percent of its gas from Russia, it is still volatile. A lower overall Russian supply could mean less gas from Norway, which is its biggest supplier.

Ursula von der Leyen (President of European Commission) stated that the European Union will be able cope with any disruptions in gas imports from Russia.

Europe’s gas stocks have been healthier this winter than expected, despite being at their lowest level in five years.

Gas prices will remain high. Many European countries, however, have invested billions to help households avoid the effects of record high energy bills.


Gazprom, the Russian energy giant Gazprom (MCX) said Thursday that gas exports through Ukraine were normal and consistent with consumer requests.

Analysts believe Russia will supply more gas to Europe than it has in the past. They also pointed out that Russia supplied uninterrupted supplies of gas to Europe throughout 2014/15’s Crimea crisis.

The Yamal Russia-Europe pipeline is responsible for 15% of Russia’s gas supplies to Europe and Turkey. Since December, flows through this pipeline have been going in the opposite direction, with gas flowing eastwards. This has contributed to high gas prices.

The flow through Russia’s main pipelines to Europe in 2021 was 37,409 gigawatts per day (GWh/d). Refinitiv Eikon data revealed that this is down from the 41,263 and 49,431 respectively in 2020 and 2019.

What is NORD STEAM 2?

Russia announced that Nord Stream 2 would double Moscow’s Baltic annual gas export capacity, which may provide relief for the European gas market.

After Russia officially recognized two regions of eastern Ukraine as separate, the German Chancellor Olaf Scholz stopped certification on Wednesday.

Washington also placed sanctions Wednesday on the company that built the pipeline.

Nord Stream 2 AG, a Swiss company registered under the Gazprom state-owned gas giant Gazprom is its parent.

The United States and Germany haven’t made any immediate changes to supply since the pipeline wasn’t operational.

However, traders expected that it would provide gas supplies before the end of this year. Prices for future deliveries have risen.

On Thursday, the Dutch Q4 2022 contract increased 35% to 114 euro/MWh.

British Winter 2022 was at 290 pounds/therm, an increase of 31%