Russia’s state-owned gas supplier has said it will cut shipments to Europe through a major pipeline, sending prices surging and reinforcing President Vladimir Putin’s willingness to use energy as a weapon against the EU.
Gazprom said gas flows would no longer be possible through the Yamal pipeline after the Kremlin imposed sanctions late on Wednesday on European gas companies. The sanctioned companies include some of its own former units as well as Europol Gaz, Yamal’s owner. The pipeline runs from Russia to Germany via Poland.
“A ban on transactions and payments to entities under sanctions has been implemented,” said Gazprom in a statement. “For Gazprom this means a ban on the use of a gas pipeline owned by Europol Gaz to transport Russian gas through Poland.”
The move strikes out the flow of Russian gas to Europe from a second pipeline in as many days and underlines Moscow’s appetite to push through with warnings to halt gas supplies to Europe.
“On the whole, the situation is escalating,” said Robert Habeck, Germany’s economy minister. “It’s becoming evident once again that Russia is using energy as a weapon.’
The retaliatory action pushed gas prices higher. Future contracts linked to ITF, the European wholesale gas price benchmark, jumped on Thursday about 13 percent to about €106 per megawatt-hour, more than quadruple levels a year ago.
Prices have risen this week from a low of about €90 per megawatt-hour as Russian gas supply to the continent faced fresh threats.
Electricity prices also rose. Prices for German power next year hit their highest level in the year to date at over €230 per megawatt-hour, according to Refinitiv.
On Wednesday Ukraine’s pipeline operator shut down the flow of gas from one of the two major pipelines that bring Russian gas through the country to
Europe, citing interference from Russian occupying forces.