Gas prices in Europe rise moderately after Russian transit halt through Ukraine

European gas prices rose moderately by 1% during the first trading session following the cessation of Russian gas transit through Ukraine.

The increase pushed prices to their highest level since November 15, 2023, as shown by data from the London ICE exchange, Caliber.Az reports via Russian media.

At the start of trading, February futures at the TTF hub in the Netherlands climbed to $543.4 per 1,000 cubic meters (€50.705 per MWh). However, prices later reversed, dropping to as low as $530.

The halt in transit follows the expiration of a longstanding agreement between Russia and Ukraine on January 1, 2025. The agreement had facilitated the transport of 40 billion cubic meters of gas annually.

Ukraine’s decision not to renew the contract left Gazprom without the legal and technical capacity to continue using the route. Consequently, deliveries were suspended on the morning of January 1. Russian President Vladimir Putin confirmed that negotiations for a new contract were unfeasible due to the limited time before the agreement’s expiration. Ukraine also declared its intent to end the transit of Russian gas.

Despite the halt, Ukraine has expressed readiness to allow gas transit through its pipeline system upon request from the European Commission, provided the gas is not of Russian origin. President Putin has suggested a workaround involving supply contracts through third-party entities, such as Turkish, Hungarian, Slovak, or Azerbaijani companies.

Industry experts highlighted a practical approach involving the transfer of gas ownership at the Russia-Ukraine border. Under this framework, the gas would become the property of a new owner and transit through Ukraine as non-Russian gas. European companies would then participate in auctions to facilitate the transit process.

By Vugar Khalilov