European gas futures surge to record with sanctions in focus

[DUBAI] European natural gas jumped to a fresh record as the market continues to focus on sanctions aimed at Russia in response to its invasion of Ukraine.

Dutch front-month futures rose as much as 20 per cent to 198 euros a MW-hour. The UK equivalent gained 17 per cent.

While sanctions aren't specifically targeting natural resources, traders and shippers are shying away from dealing with Russian suppliers, including Gazprom's energy-trading arm.

Still, Russian gas continues to flow through pipelines to Europe, including those transiting Ukraine, and they even have increased since the invasion last week.

Supplies through a key pipeline to Slovakia's Velke Kapusany station remain high and Gazprom booked some pipeline capacity for Thursday (Mar 3) to send gas to the Mallnow station in Germany. Gazprom said it's sending gas to Europe via Ukraine in line with clients' requests.

Europe has imported more liquefied natural gas than usual this year. While LNG imports could help reduce the continent's reliance on Russian gas, European buyers will be in competition with those in Asia also starting to replenish their stocks over the summer.

China's gas consumption was growing before the conflict because of the country's decarbonization drive. The government plans to prioritize energy and commodities supply security in response to the war in Ukraine. BLOOMBERG