Keep knowledgeable with free updates
Merely signal as much as the EU power myFT Digest — delivered on to your inbox.
European gasoline costs hit their highest ranges in a 12 months on Thursday after Austrian group OMV warned of a possible disruption to provides from Russia.
Futures on the European benchmark, TTF, rose as a lot as 5 per cent to €46 euros per megawatt hour in early commerce in Amsterdam earlier than paring some good points.
The surge got here after OMV warned late on Wednesday of “potential halt of gasoline provide” from Russia, after the Viennese power and chemical compounds group was awarded €230mn from an arbitration ruling towards Gazprom.
OMV had complained of “irregular” gasoline provides from the Russian firm into Germany, earlier than provides absolutely led to September 2022.
OMV stated it will “offset” the awarded quantity towards invoices on its contract with Gazprom with “fast impact”. Nonetheless it warned that its transfer may result in “a deterioration of the contractual relationship”.
Europe’s gasoline market has been delicate to provide disruption since Russia began slicing provides to Europe in 2021 forward of the invasion of Ukraine. In recent times, occasions that disrupt, or threaten to disrupt, international provides of gasoline have led to sharp worth strikes in Europe.
Austria and Slovakia nonetheless obtain Russian gasoline by Ukraine, owing to a transit settlement that permits the molecules to cross by the war-torn nation, but it surely expires on the finish of the 12 months. The route is one in every of solely two Russian routes that offer Europe with gasoline and accounts for about 5 per cent of the EU’s annual gasoline imports.
Analysts have warned that volumes passing by the Ukraine transit route might almost halve if Gazprom halts provides due to OMV’s determination, and the market would discover out in every week’s time.
Tom Marzec-Manser, head of gasoline analytics at consultancy ICIS, stated Gazprom’s clients usually paid for provides on the twentieth of the month.
“OMV could withhold this subsequent cost, which might be round €213mn, however this might set off Gazprom in slicing that contract off instantly,” he warned.
The announcement comes simply as colder climate units in and annual gasoline demand for heating rises; the EU’s gasoline storages have had internet withdrawals for 10 consecutive days, in accordance with knowledge from trade knowledge supplier Gasoline Infrastructure Europe.
OMV added that it will have the ability to fulfil contracts to ship power because it had diversified away from Russian sourced gasoline. Austria’s power minister Leonore Gewessler additionally wrote on social media website X that OMV’s actions “don’t pose a direct menace to our safety of provide”.
Nonetheless, she warned: “It’s clear {that a} sudden interruption in provide might trigger stress on the gasoline markets.”
SPP, Slovakia’s largest power supplier, additionally stated on Wednesday that it had signed a “short-term, pilot contract for the availability of pure gasoline” with Azerbaijan’s state oil and gasoline firm Socar, in anticipation of the Ukraine transit deal expiring.
“SPP helps the continuation of gasoline transportation by the territory of Ukraine . . . as a result of it’s the most cost-effective resolution for our clients,” it stated. “Nonetheless, as a result of excessive threat of stopping gasoline provides by way of the japanese department, we’re taking measures to ensure protected gasoline provides to our clients.”
