Flows of Russian gas to Europe via Ukraine dropped by a quarter on Wednesday after Kyiv halted the use of a major transit route, blaming interference by occupying Russian forces, the first time shipments have been disrupted since the conflict began.
Ukraine has remained a major transit route for Russian gas to Europe even after Moscow launched what it calls a "special military operation."
The transit point Ukraine shut down usually handles about 8% of Russian gas flows to Europe, although European states said they were still receiving supplies. The Ukraine corridor mostly sends gas to Austria, Italy, Slovakia and other Eastern European states.
The move fuels fears that the Kremlin’s campaign in its pro-Western neighbor could see gas supplies to Europe via Ukraine cut off at a time when prices have already soared.
Ukraine’s pipeline operator GTSOU said Tuesday that it was halting gas transport at the Sokhranivka transit point, which it said delivered almost a third of fuel piped from Russia to Europe via Ukraine, as Russian occupying forces now in control were interfering with operations.
It said it was declaring "force majeure," a clause invoked when a business is hit by something beyond its control, and would divert deliveries for Europe to another route, the Sudzha entry point, the biggest of Ukraine's two crossing points.
GTSOU Chief Executive Sergiy Makogon said Russian occupying forces had started taking gas and sending it to Russia-backed separatist regions in east Ukraine. He did not cite evidence.
The gas pipeline via the Sokhranovka point runs through Ukraine's Luhansk region, part of which has been under the control of pro-Russian separatists. Sudzha lies further northwest.
Kremlin spokesperson Dmitry Peskov said Russia remained committed to deals to supply gas, when asked to comment on the row with Ukraine over the transit route. He said Gazprom had not received advance notice of Ukraine’s move.
Kremlin-controlled Gazprom, which has a monopoly on Russian gas exports via pipeline, did not immediately respond to a request for comment on Wednesday but had said on Tuesday it saw no proof of force majeure or obstacles to normal flows. It said it was continuing to meet its obligations to supply gas.
The company had denied that there was a case for the Ukrainian operator to declare "force majeure" and said it was impossible to reroute all the supplies.
Gas flows via Ukraine had been normal until Tuesday and on Monday had reached their highest level since November.
Figures released by GTSOU Wednesday showed that flows at Sokhranivka had dropped to zero and were due to rise at a second point, but not enough to replace the decrease.
GTSOU said the amount of gas transiting Ukraine via these routes on Wednesday could fall by 18%, or 16 million cubic meters, compared to Tuesday.
Gazprom said it was still shipping gas to Europe via Ukraine, but volumes were seen at 72 million cubic meters (mcm) on Wednesday, down from 95.8 mcm on Tuesday.
Replacing Russian flows
The European Union is scrambling to lessen its reliance on Russian energy supplies, but it has shied away from imposing sanctions on crucial gas flows.
Wednesday’s disruption drove Europe’s benchmark gas price for the third quarter up to 100 euros ($105) per megawatt hour at the market open before slipping back. The price is more than 250% above its level a year ago.
Gazprom said on Tuesday it was not technically possible to shift all volumes to the Sudzha route, as GTSOU proposed.
GTSOU said volumes had been diverted to Sudzha in October 2020 when repairs were carried out on the Sokhranovka route. At that time, it said Sudzha handled 165.1 mcm a day – much more than Tuesday's total flows through Ukraine of 95.8 mcm.
"Consequently, claims that it is impossible to carry out the transfer of flows from Sokhranovka to Sudzha point are untrue," GTSOU said in a statement on Facebook.
Most European countries have cut reliance on Russian gas in recent years. Some countries have alternative sources of supply, although replacing all Russian flows presents a challenge given the global gas market was tight even before the Ukraine war.
Italy, which last year consumed 76 billion cubic meters (bcm) of gas, imported about 40% from Russia via Ukraine. Besides Russian flows, Italy also has pipeline connections for gas from Algeria, Libya, Azerbaijan and the North Sea.
Slovak Economy Minister Richard Sulik said the flow of gas to Slovakia from Ukraine was stable and there were no signs of a supply problem.
Austrian energy group OMV said its gas deliveries were running according to requests.
Alongside the Ukraine transit corridor, Europe also receives gas via Poland through the Yamal-Europe pipeline and via the Nord Stream 1 pipeline under the Baltic Sea to Germany.
Germany, Europe’s biggest economy and one of the region’s heaviest users of Russian gas, said its gas supply was secure.
European Union gas stocks are now about 37% full, according to Gas Infrastructure Europe data.
"That said, storage facilities are still less amply filled than usual," said Barbara Lambrecht, energy analyst at Commerzbank Research, adding that any interruptions to supply could slow the refilling process.