Russian Gas Flows Resume to Europe, Reducing Prices and Easing Fears

Wholesale gas prices fell in Europe on Tuesday after Russian gas flows resumed to Germany, raising hopes that Moscow is acting on a pledge to increase supplies and ease concerns about shortages and high prices as winter approaches.

Russia started pumping gas to Germany again late on Monday via a pipeline from Yamal in Siberia, a day after a halt in exports had pushed up prices in Europe. The gas flows later rose to their highest level in almost two weeks, German data showed.

Russian President Vladimir Putin ordered state gas company Gazprom to increase supplies to Europe and rebuild its inventories there once domestic storage tanks are replenished.

In a sign it is starting to carry out that order, Gazprom said on Tuesday it had begun pumping gas to five European underground gas storages for November.

Russia provides a third of Europe’s gas and its supply intentions are critical at a time when a surge in spot prices has hit households and businesses alike in Europe, underlining Europe’s heavy dependence on Moscow for its energy supplies.

Though wholesale prices in European Union countries and Britain fell, market analysts said a bigger drop in prices would depend on Russia doing more to ease European concerns and on how cold the coming winter is.

“So, until those concerns go away, prices will stay high,” Trevor Sikorski, an analyst at consultancy Energy Aspects, said by email.

Russia has denied withholding supplies to Europe to exert pressure on German regulators to approve gas shipments through the new Nord Stream 2 gas pipeline beneath the Baltic Sea. Germany has until early January to certify the pipeline.