Reference prices for natural gas in Europe fell by as much as 10% on Thursday, while Russian gas supplies to the mainland are continuing normally in the context of reports of military action around two major pumping stations, Bloomberg reports.
According to data provided by Slovak network operator Eustream, gas supplies via a major pipeline across Ukraine would remain at a normal level on Thursday. Russian giant Gazprom PSJC also said that its deliveries via Ukraine are in line with customer requests, according to Agerpres.
Under these conditions, around 8:21 a.m. on the Amsterdam Stock Exchange, gas futures were down 5.7% to 147 euros per Megawatt-hour.
On Wednesday, the operator of the Ukrainian gas pipeline network announced that Russian troops had entered two of the four stations pumping gas to Europe and officials from the two countries tried to distance themselves from responsibility for a possible interruption of supplies.
Governments across Europe have begun developing back-up plans for a scenario in which Russia will cut off gas supplies to Europe. The European Union has recently announced measures to reduce the region’s dependence on Russian gas, but any immediate disruption would have serious economic consequences by raising wholesale prices, paralyzing industry and raising inflation.
Russia is responsible for about a third of Europe’s gas needs. Most Russian gas supplies reach Europe through pipelines and it will be difficult to find alternatives to these large quantities of natural gas supplied by Russia.
“The EU is unlikely to be able to easily replace Russian gas imports in the event of a major supply disruption,” said Federico Santi, an analyst at Eurasia Group U.K. Ltd.
The price of natural gas has been extremely volatile this week, after a record highs on Monday, with traders assessing the risks of Russia disrupting deliveries or EU imposing sanctions. The United States and the United Kingdom have decided to ban oil imports from Russia, but authorities in London have not included natural gas in the sanctions list.