Gas prices rise in Europe due to cold weather

European natural gas benchmarks rose for a second straight session on Thursday, with the weather forecast calling for cooler temperatures in many parts of the continent, Bloomberg reported, according to Agerpres.

At the TTF gas hub in Amsterdam, where European benchmark prices are set, natural gas futures rose 2.3% on Thursday to 48.90 euros per megawatt-hour (MWh).

After a period of mild weather, cooler temperatures are expected to return to Western Europe next week, then quickly spread to the continent, according to data from Maxar Technologies. These developments are expected to increase demand for heat, putting pressure on gas prices. Higher oil prices are also weighing on natural gas futures as traders monitor risks to global energy supplies amid conflicts in Ukraine and the Middle East.

• Stocks falling

Fuel stocks in Europe are falling faster than usual, potentially complicating efforts to rebuild stocks next year. With less than a month before the expiration of a gas transit agreement between Russia and Ukraine, Europe risks losing some of its gas supplies during the peak of the cold season.

For now, Russian gas exports via Ukraine are continuing as usual, although there was a slight decline yesterday. Markets have reacted to these developments, according to consultancy Auxilione.

Europe's gas storage facilities are currently only 85% full, down from 95% at the same time last year, and the European Union has decided to revise its gas stock target upwards by February to ensure it is adequately prepared for 2025.

"There is a risk that natural gas futures prices will rise as cold weather is already reducing stocks," Bloomberg Intelligence analysts Patricio Alvarez and Joao Martins said yesterday. They expect Europe's gas storage facilities to be 39% full by the end of the season, barring extreme cold temperatures, complicating next summer's filling campaign and intensifying competition with Asia for the fuel.

• Moldova: "Stopping Russian gas supplies to Transnistria is a "very realistic' scenario"

Stopping Russian gas supplies to the breakaway Transnistria region in eastern Moldova after January 1, 2025 is a "very realistic" scenario, Victor Parlicov, Moldova's energy minister, said recently after talks with Russian group Gazprom, Reuters reports.

Parlicov met with Gazprom's chief in November to discuss alternative routes for supplying Transnistria if transit through Ukraine is stopped.

A transit agreement signed five years ago by Moscow and Kiev on Russian gas exports to Europe via Ukraine expires at the end of this year. Russia has expressed its willingness to continue gas supplies via Ukraine, despite the war, while Kiev has refused to engage in talks with Moscow on gas exports.

Transnistria is heavily dependent on Russian natural gas supplied via Ukraine.

Parlicov told a press conference in Chisinau that Gazprom is ready to supply Transnistria with gas via the current route, but it depends on Moldova and Ukraine whether they agree to the transit.

"Following discussions with my Ukrainian colleagues, I understood that if there is a decision to continue the transit, it will be made at the last minute," said the Moldovan energy minister.

Moldova receives about two billion cubic meters (bcm) of gas per year from Russia via Ukraine and, from 2022, Tiraspol and Chisinau have agreed that all Russian gas received by Moldova will go to Transnistria.

Transnistria has a large power plant powered by Russian gas, and in return, Chisinau buys electricity from Tiraspol at a relatively low fixed price.

Moldova argues that if Ukraine stops the transit of Russian gas, an alternative for Transnistria could be gas delivered via the TurkStream pipeline to Turkey and then through Bulgaria and Romania.

However, Parlicov said that Gazprom had linked the continuation of deliveries via alternative routes to its demands that Chisinau pay the debt for previous gas deliveries to Moldova, valued by Russia at $709 million. Moldova claims that its debt amounts to $8.6 million.

"We believe it is incorrect to link the debt issue to the supply issue (to Transnistria)," Parlicov said, noting that supplies through Ukraine and alternative routes could stop on January 1, and then Chisinau would need international support to pay for gas coming from other sources.

Gazprom representatives did not comment on the meeting with the Moldovan official.