Fear of Russian gas cuts is raising prices: Expert

ANKARA

The record-high natural gas prices in European markets stemmed from fear and panic that Russian supplies will be cut off, according to Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies Natural Gas Research Program on Monday.

The price on April futures contracts, traded on the TTF, the Netherlands-based virtual natural gas trading point, rose as high as €322 on March 7. This price is in stark contrast to that on Friday, March 4, with prices closing at €192.5.

According to Yafimava, “these prices mean that the market fears the entire Russian natural gas supply may be lost. However, these fears do not mean that this supply will stop."

She argued that if Europe were to introduce an embargo on purchases of Russian gas or cut the Russian banks, handling gas payments, off SWIFT - thus making Russian gas supplies to Europe impossible - then it would be Europe cutting itself from Russian gas, not Russia cutting Europe off.

The US and its allies are in "active" talks to ban Russian crude oil imports, US Secretary of State Antony Blinken confirmed late Sunday.

This puts EU countries in a difficult situation with the continent’s dependence on Russian gas, which has been on the rise since 2011.

EU countries, which obtained 30% of their total gas from Russia in 2011, have not been able to achieve energy independence through alternative resources yet.

The Russian share of Europe’s gas supplies has incrementally increased since 2012.

Russia accounted for 32% of Europe's gas in 2012, 39% in 2013, 37.5% in 2014, 37% in 2015, 39.9% in 2016 and 39.3%, in 2017. This increased further in recent years to 40.2% in 2018, 45.5% in 2019, 43.9% in 2020 and 40% in 2021.

According to International Energy Agency data, 155 billion cubic meters of gas imported by Europe from Russia last year constituted 45% of total gas imports and 40% of total gas consumption.

Experts highlight the interdependence of the gas trade between Europe and Russia and say Europe cannot easily replace Russian gas, and Russia cannot easily obtain the income it earns from the energy commodities it sells to Europe from another source.