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Ukraine Cries ‘Blackmail’ As Gazprom Reduces Gas Supply To Europe

Despite a strong rebound in European natural gas demand, Russia’s gas giant Gazprom has not booked additional entry capacity to Europe via Ukraine—a move that Ukraine’s gas transmission system operator described as “blackmail.”

Gazprom did not book additional capacity via Ukraine at this week’s monthly auction, which will effectively mean that supplies to Europe would be reduced by 2 billion cubic meters in July, Upstream quoted Gazprom as saying.

The Russian gas monopoly will also shut for maintenance the Yamal-Europe pipeline carrying gas from Russia through Belarus and Poland to Germany between July 6 and 10. Gazprom will also halt deliveries via Nord Stream between July 13 and 22.

Despite the maintenance on the northern pipeline routes to Europe, Gazprom hasn’t taken extra capacity offered in Ukraine.

Analysts say that this could be an opportunistic move from the Russian giant to drive up Europe’s gas prices further and take advantage of what are now the highest prices in 13 years.

Other analysts think that Gazprom’s effective reduction in supplies would be to force Europe to recognize that gas customers on the continent need the controversial Nord Stream 2 pipeline to Germany bypassing Ukraine.

“Gazprom is effectively saying to the EU: ‘give us the green light for Nord Stream 2 and we will send you all the gas you need’,” Tom Marzec-Manser, lead European gas analyst at ICIS, told the Financial Times last week.

This week, Gazprom did not book additional capacity for the route via Ukraine, drawing criticism from Ukraine’s gas transmission system operator.

The Russian gas giant is looking to push European gas prices even higher by deliberately withholding supply, Sergiy Makogon, the chief executive officer of Gas Transmission System Operator of Ukraine, told FT, noting that the recent jump in prices is “an artificially created problem.”

“[Europe] should not follow this blackmail of Gazprom with prices,” Makogon told FT.  

By Tsvetana Paraskova for Oilprice.com

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