Ukraine and Russia Clash over Gas Raises Threat to Europe’s Supply

Ukraine and Russia are clashing over natural gas that is sent through pipelines to Europe, disrupting supplies for the first time since the invasion. 

Russian gas flowing through one of two key entry points stopped today as Russian occupying forces in Ukraine disrupted operations. 

The Gas Transmission System Operator of Ukraine’s network manager said the fuel could be rerouted to avoid disruptions, but that Russian gas giant Gazprom argued the switch is not possible due to how the system works. 

Russia has sent gas through Ukraine as normal since it invaded the country. But orders show overall transit shipments are meant to have a decline of about 18 percent today compared to yesterday. 

A second border point saw an increase in flow, which eased some concern about really tight supplies, but European gas prices still jumped by nearly 7 percent before erasing gains. 

Analysts said that a contract holder confirming that deliveries are not being made is what is needed to get a big market reaction. Gazprom’s statement shows that Russia could blame Ukraine for a cut in flows, but a lot of risk is already baked into prompt prices. 

Kyiv has warned Russia that the actions of its military and occupiers in the eastern region of Luhansk could cause a half of about a third of gas transiting to Europe. 

Ukraine energy company Naftogaz said in a statement that Ukraine does not bear responsibility for gas transit through Russia-occupied territories, and that Russian company Gazprom was properly and completely informed of this. 

Naftogaz had offered to reroute gas in a switch that has no technical difficulties and involves no costs for RUssia, but Gazprom claimed this was impossible. Regardless of Gazprom’s claim, gas orders show there was indeed an increase through this entry point. 

Experts and analysts say alarm bells are ringing more than ever of what may be in store. 

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