By Elena Mazneva on 11/4/2021

MOSCOW (Bloomberg) – European natural gas futures jumped, extending their rebound from last week’s slump, as shipments from Russia fell.

While Europe’s biggest supplier has promised additional volumes starting next week, gas flows to the region declined over the weekend and again on Monday. Shipments via a key transit route to Poland stopped, with the country receiving gas from Germany instead for a fifth straight day. Flows through Ukraine also fell, along with TurkStream supplies via Bulgaria because of a damaged pipeline, which is now repaired.

Russia’s Gazprom PJSC has repeatedly said that it’s sending gas to Europe in line with requests from clients. Elena Burmistrova, who heads Gazprom’s export arm, on Wednesday again shrugged off accusations that Russia is to blame for the region’s supply squeeze and this year’s price rally.

“We want to see a balanced and predictable market,” she said in a pre-recorded speech for the Flame conference in Amsterdam, which was delayed several times during the day. “We are not interested in either record low or record high prices.”

Many industrial users have cut consumption of the fuel after prices soared earlier this year, but capped flows from Russia are exacerbating supply concerns as Europe enters winter with the lowest storage levels in at least a decade and competition with Asia for liquefied natural gas remains intense.

Russia’s Yamal-Europe pipeline has not been shipping gas to Germany since Saturday. The Mallnow station, where the link terminates, instead is sending gas eastward from Germany to Poland, with companies in both countries saying they are receiving requested volumes in full. Data from grid operator Gascade briefly indicated flows may return to normal from Thursday, but later re-nominations for westward deliveries reverted back to zero.

The Kremlin reiterated on Tuesday that Russia remains committed to start pumping additional gas to Europe once the country has filled its domestic inventories on Nov. 8. Last week, President Vladimir Putin ordered Gazprom to boost stockpiles at its storage facilities in Germany and Austria, which are far below normal levels and are dragging Europe’s average rate down.

“If Russia does what Putin said it will do, then there will be a big relief,” Frank van Doorn, head of trading at Swedish utility Vattenfall AS, said in an interview at Flame. “If there is no additional gas coming on Monday, we could see a significant price spike.”

Dutch front-month gas closed 13% higher, the most since Oct. 5, and settled at 76.54 euros per megawatt-hour after choppy trading. The U.K. equivalent rose nearly 14% to 196.72 pence a therm.

While prices have declined by more than half from last month’s records, they still have more than tripled this year.

The market remains “very, very tight” and if the coming winter is colder than usual, there won’t be enough gas to meet demand, Pablo Galante Escobar, head of LNG at Vitol Group, said at Flame. Temperatures in China and South Korea are already close to 10 degrees below average now, he said.



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