The G-7 rejects Putin’s request to pay for Russian gas in rubles
European reference futures are closed at over 100 euros per megawatt-hour, after the initial rush of volatility due to the Russian invasion of Ukraine last month, in addition to low European stocks.
While warehouses are showing the first signs of replenishment, forecasting lower temperatures over the next two weeks could delay the filling of facilities for next winter.
The flows from Russia, which make up about 40% of European gas demand, have remained largely stable during the war in Ukraine. The continent’s supply through key pipeline routes remains stable at a high level, network data showed on Monday. Russian exporter Gazprom PJSC says gas flows normally through Ukraine.
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However, there is uncertainty about the request of Russian President Vladimir Putin that the gas that his nation sends to gas pipelines to Europe be paid in rubles. The energy ministers of the Group of Seven unanimously rejected the request as a “unilateral and clear breach of contract”, said German Minister of Economy Robert Habek.
However, Russia will not supply its gas for free, and if Europe refuses to pay for Russian gas supplies to Europe, Russia will consider what to do next, Kremlin spokesman Dmitry Peskov told reporters.
Europe seeks to reduce its reliance on Russian energy. The European Union and the United States, the largest producer of liquefied natural gas this year, agreed to increase deliveries last week. The bloc’s leaders also backed the idea that member states buy gas together to replenish depleted reserves and get lower prices in tight markets.
“We expect to continue to receive news and comments from European heads of state on changes in Europe’s energy mix, but we acknowledge that replacing Russian energy is likely to be a challenge in the near future,” Moscow-based Sova Capital Ltd. said. in an e-mail message.
Dutch gas futures for the month ahead rose 1.3% to 102.55 euros per megawatt-hour in Amsterdam, after falling to 93 euros earlier. The British contract rose 3.9%.
Source: bloomberg.com
