Markets spooked with uncertainty remaining gas imports from Russia

Uncertainty surrounding Europe’s last remaining Russian imports spooked gas hubs on Wednesday.

Near curve gas prices saw the biggest gains of the session, with the August 24 contract surging 3.3p/therm (0.11p/kWh) day-on-day following news that may threaten Russian pipeline supply via Ukraine, thus undermining the EU’s ability to fully replenish its storage reserves by the end of summer.

Reports broke early on Wednesday that Germany’s state-owned Uniper had won an arbitration case against Russia’s Gazprom PJSC (export arm) for failure to deliver contracted volumes in the wake of the Ukraine invasion and the termination of Nord Stream flows that followed soon after.

The tribunal, which took place in Stockholm on 7th June, ordered that Gazprom pay €13 billion in damages and lost revenue and added that Uniper had the right to terminate supply contracts with Gazprom, which the company opted to do just days after the ruling.

This case has effectively awarded legal precedent to other European firms currently locked into long-term supply contracts with Gazprom such as Austria’s OMV and Slovakia’s Eustream, potentially tightening the supply & demand balance across the continent.

In other news, Chevron Australia has confirmed that urgent repair works have commenced at an offshore platform that directly feeds the companies Wheatstone LNG facility. Australia had the second largest LNG export capacity in the world as of October 2023 and a prolonged outage at this facility could further drive up Asian spot prices, potentially diverting even more cargoes away from the European market.

This morning, natural gas prices have so far continued their upward trajectory, with the Winter 24 front-season contract currently being offered circa 2p/therm (0.07p/kWh) above its previous settlement, at time of writing.

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