geopolitics-00544
Gas termoplant

European gas prices hit a new record high on Tuesday after a pipeline that brings Russian gas to Germany switched to flow east, a move the Kremlin said had no political backdrop, while two big German customerssaid Gazprom was meeting supply obligations.

Westward gas flows through the Yamal-Europe pipeline, one of the major routes for Russian gas to Europe, had been falling since Saturday and, after stopping early on Tuesday, reversed direction, data from network operator Gascade showed.

Some western politicians and industry experts have accused Russia of withholding gas deliveries to Europe amid political tensions over Ukraine, as well as delays in the certification of another pipeline, Nord Stream 2.

Russia denies any connection.

“There is absolutely no connection (to Nord Stream 2), this is a purely commercial situation”, Kremlin spokesman Dmitry Peskov told a conference call on Tuesday, asked on possible links between Yamal flows and Nord Stream 2.

Traders said the reverse flows added to bullish factors for the gas market, such as strong power station demand, with many French nuclear plants closed, and colder weather.

The front-month wholesale Dutch gas price, the European benchmark, rose more than 16% to a record high of 171.40 euros ($193.46) per megawatt hour on Tuesday, and the equivalent British gas contract also hit a new peak at 4.29 pounds ($5.68) per therm.

“Europe has very little storage buffer this winter and Europe’s balance is therefore a lot more dependent on imports than in previous years,” James Waddell, head of European gas at Energy Aspects, said.

“Additionally, Gazprom has traditionally shipped around 20% of its supply to Europe through Poland, but these flows have been inconsistent this year and driving up uncertainty about how much gas Europe will actually receive from Russia.”