European gas prices rose on Monday as traders said that although Gazprom began filling some of its storage facilities on the European continent, there is little evidence that Russia is prepared to increase exports to the region.
Russian President Vladimir Putin last month ordered the state-owned natural gas giant Gazprom to start filling storage facilities controlled by it in Germany and Austria by November 8 at the latest, which strengthened hopes that exports to Europe will increase.
However, despite data showing that Gazprom began adding some gas to its largest storage locations in these countries over the weekend, traders and analysts said that it is disappointing that Russia did not book additional pipeline capacity, which indicates any storage. Filling will all come from existing traffic.
If the weather is slightly colder than normal and Russia does not increase exports to Western Europe, it is unlikely to significantly ease the market disrupted by tight supply and fears of shortages before the winter.
Laurent Ruseckas of the consulting firm IHS Markit said: “Russia has done what it says to do, but in a very narrow way.”
“Overall exports to Europe have not increased significantly, which is why some traders are disappointed, even if Gazprom’s own storage facilities are starting to see some natural gas coming in,” Rusekas added. “If Gazprom re-auctions short-term natural gas supplies as it did in previous years, the market will have a greater reaction.”
The European benchmark price rose by 10% to more than 80 euros per MWh, and then fell back to 76.50 euros, while the benchmark price for December deliveries in the UK rose by 6% to about 2 pounds per heat.
After Putin stated that Russia’s supply to Western Europe may increase, European natural gas prices have fallen slightly from their historical highs in October.
After the Russian President ordered the filling of sites controlled by Gazprom, traders and analysts focused on November 8. The company had allowed it to drop to an abnormally low level. This caused criticism from analysts who believed that Moscow was One of the reasons for the tight supply this year.
Russia has restricted its exports to Western Europe to exports guaranteed by long-term contracts this year, and linked the increased supply to the launch of the controversial Beixi 2 pipeline, which crosses the Baltic Sea to Germany.
Some European lawmakers have accused Russia of instigating a natural gas crisis to increase pressure on European regulators to speed up pipeline authorization. Russia denies restricting the supply of natural gas.
Putin’s spokesperson Dmitry Peskov told reporters on Monday that no progress has been made in the certification of Beixi 2. “Obviously, it will take some time, and the most important thing here is to be patient,” Peskov said, according to Interfax news agency.
Additional reporting by Max Seddon in Moscow