Russia’s sanctions: Europe’s gas supply crisis has escalated since Russia imposed sanctions

A day after Ukraine closed a major gas transit route, Moscow imposed sanctions on European subsidiaries of state-owned Gazprom, increasing pressure on Europe to secure alternative gas supplies on Thursday.

As gas prices rose, major European benchmarks rose 12% as buyers were unsettled by the growing threat of European supplies due to high dependence on Russia.

Moscow has already cut off supplies to Bulgaria and Poland, and countries are rushing to replenish growing gas reserves before winter.

Russia late on Wednesday imposed sanctions on Gazprom’s European affiliates, including Gazprom Germany, a power trade, storage and transmission business that Germany kept under wraps last month to secure supplies.

It also imposed sanctions on the owner of the Polish section of the Yamal-Europe pipeline, which carries Russian gas to Europe.

Kremlin spokesman Dmitry Peskov said the affected companies had no ties or could not participate in the supply of Russian gas.

The victims listed on the Russian government’s website are mainly from countries that have imposed sanctions on Russia in response to Russia’s invasion of Ukraine, most of which are members of the European Union.

Russia’s top client in Europe, Germany, has said that some of Gazprom’s German affiliates are not getting gas due to sanctions.

“Gazprom and its affiliates have suffered,” German Economy Minister Robert Habek told the Bundestag lower house. “This means that some of the allies are no longer getting gas from Russia. But the market is offering alternatives.”

The list also includes Germany’s largest gas storage facility in Rehden, Lower Saxony, with a capacity of 4 billion cubic meters and operated by Astora, as well as industrial and local utility supplier Wingas.

Wings says it will continue to operate but will face shortages. Rival Uniper, VNG or RWE can be a potential source of supply in the market. Russian gas continues to flow into Germany through the Nord Stream 1 pipeline beneath the Baltic Sea.

If the authorized companies do not work, other companies, such as Gas Utilities, may accept the agreement, which may include agreeing to new terms with Gazprom, including payment, said Henning Glowstein, director of the Eurasia Group.

He added, “Gazprom’s motives here may be beyond sending a retaliatory signal (for EU sanctions).”


Gazprom has said it will no longer be able to export gas through Poland via the Yamal-Europe pipeline following a ban on Europol gas owned by the Polish division.

The pipeline connects the Russian gas fields in the Yamal Peninsula and Western Siberia with Poland and Germany via Belarus and has a capacity of 33 billion cubic meters (bcm), about one-sixth of Russia’s gas exports to Europe.

However, the gas, which has been flowing east through a pipeline from Germany to Poland for weeks, has enabled Poland – which was cut off from Russian supplies to Bulgaria last month for refusing to comply with a new payment system to build stocks.

Exit flow to Poland at the Malno metering point on the German border stood at 9,734,151 kilowatt-hours (kWh / h) on Thursday, down from about 10,400,000 kWh / h the previous day, data from the Gascade pipeline operator showed.

Germany’s Habek says Russia’s measures appear to be designed to raise prices, but the expected 3% reduction in Russian gas supplies could compensate the market, albeit at a higher cost.

TTF Hub, the European benchmark Dutch gas price rose 20% before closing 12% higher. Benchmarks have skyrocketed over the past year, adding to the burden on families and businesses.

Although German gas storage is about 40% full, it is low for the rest of the year and inventories need to be made to prepare for winter.


Ukraine closed a gas transit route just a day after Moscow imposed sanctions, blaming Russian forces for the intervention, and for the first time since the attack, exports through Ukraine have been disrupted.

The Sokhranovka gas transit point will not be reopened until Kyiv has full control over its pipeline system, the head of the operator GTSOU said, adding that the flow could be redirected to an alternative Sudja transit point, although Gazprom said it was not technically possible.

Ukraine’s gas transit system operator reported that Gazprom had booked a capacity of 65.67 million cubic meters through the Sudja entry point for Friday, vs. 53.45 mcm for Thursday.

Although the European Commission has said that the suspension of Ukraine does not present an immediate gas supply problem, the market is concerned about the winter, when heat demand will increase and global supply constraints will bite.

“Storage levels are now large enough to last for most of 2022, even if Russian flows stop immediately, excluding any unforeseen weather events – but the outlook for winter 2022 supply is now much more disappointing,” said Kaushal Ramesh, senior analyst at Rystad Shakti.

Finnish politicians have been warned that Russia could cut off gas supplies to its neighbor on Friday, the newspaper Iltalehati reported, citing unnamed sources. Gas accounts for about 5% of Finland’s energy consumption.

There is still confusion among EU gas companies over a financing scheme signed by Moscow in March that the European Commission said would violate EU sanctions.

Berlin hopes that Germany’s top energy producer, RWE, will soon clarify whether Russian gas can be paid for under the proposed project in Moscow, meaning the prime minister said on Thursday that a deadline was approaching at the end of the month.

Russia’s demand for a payment in rubles has been rejected by most European gas buyers in the details of the process, which raises concerns about the need to open an account with Gazprombank, potential supply disruptions and its far-reaching consequences for Europe and Germany in particular.

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