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Ukraine 'forced' to halt European gas supplies

By JONATHAN POWELL in London | China Daily Global | Updated: 2022-05-13 09:07

Flow of natural gas into Germany dropped by a quarter this week after authorities in Ukraine said they were forced to shut a key hub that supplies Europe.

Russian state energy giant Gazprom had stopped supplying gas to the key Sokhranivka transit point on Tuesday, said a statement from Ukraine pipeline operator GTSOU, which declared "force majeure", a clause invoked when a business is hit by something beyond its control.

However, the Russian company said it saw no proof of force majeure or obstacles to continuing as before, reported Reuters, adding that Gazprom had insisted it was still meeting "all obligations to buyers of gas in Europe".

The Sokhranivka hub manages almost a third of Europe's gas supply from Russia, including into Austria, Italy, Slovakia and other east European states, said the Associated Press news agency.

It noted that despite ongoing conflict in the country, Ukraine has remained a major transit route for Russian gas to Europe and the disruption deepens concerns about a worsening energy crisis in Europe.

The European Union has been criticized for the slow pace of its efforts to reduce dependence on Russian energy, with the bloc only committing to do so "before 2030".

This week's disruption piles more pressure on Germany's Chancellor Olaf Scholz to come up with an alternative quickly, reported The Daily Telegraph, although economists in Germany have warned that any sudden change in policy could plunge the country into recession.

The Financial Times reported that the mission to wean the EU off Russian oil and gas could cost the bloc almost 200 billion euros ($209 billion) over the next five years.

Robert Habeck, Germany's economy minister, was quoted by Reuters as saying overall supplies remained "stable" on Wednesday, noting that most of its gas was received directly from Russia via the Nord Stream 1 pipeline.

The European Commission said the disruption presented no "immediate security of supply concerns", reported Euronews.

One energy analyst told the Telegraph that the Ukraine's decision to stop flows from the key hub could be a "political motive" since the country has been urging the EU to stop purchasing Russian gas. Caroline Bain, chief commodities economist at Capital Economics, said: "There doesn't seem to be a technical reason for suspending gas flows-it seems to be more to do with the fact that the facilities are in Russian hands.

"It suggests that both Ukraine and Russia-which has already cut off Poland and Bulgaria-are now prepared to take actions that could affect European gas supplies."

Jack Sharples, a researcher at the Oxford Institute for Energy Studies, told the Telegraph that with many EU states heavily reliant on imports of Russian gas, the disruption to pipeline flows through Ukraine "would focus minds in Berlin and Brussels".

Nathan Piper, an energy analyst at Investec, was quoted as saying the disruption could effect member states' plans for winter storage, meaning "everyone is much more exposed to higher prices".

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