Gas crisis: Expert issues warning over 'significant' price rises

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The conflict over the Yamal-Europe pipeline, which usually delivers gas from Russia to Western Europe, continues. Normally the Yamal-Europe, which is Europe’s longest gas pipeline, transports Russian natural gas overland to Germany and Western Europe. However, in the past week, it has been redirecting gas from Germany to Poland to make up for a shortfall of fuel as temperatures drop to -10C and Russia cuts gas supplies.

On Sunday, German network operator Gascade claimed Russia sent the fuel back to Poland for a sixth straight day – a huge blow to the EU, where gas prices have been skyrocketing.

The ownership of Gascade — part Russian, part German — suggests the issues are the result of a political feud.

However, Russia has this week denied accusations that the flow reversal was a political move, stating it was a purely commercial matter.

Speaking to the Russian media, Putin blamed the ongoing gas crisis on importers like Germany and France and their failure to sign long-term supply contracts.

He said that the EU could end the skyrocketing gas prices by ending delays to the Nord Stream 2 gas pipeline that runs from Russia to Germany under the Baltic Sea.

He said: “They are sawing the branch they are sitting on.”

Experts have accused Mr Putin of tinkering with gas supplies in order to pressure the European Union into approving the Nord Stream 2 pipeline.

While the Russian state-owned gas corporation Gazprom is meeting long-term contracts with the EU, it has effectively stopped selling gas on the spot market.

It has also been accused of not reserving additional capacity in the pipelines or fully using what it has already reserved.

The Kremlin has attributed the reversal to the EU’s failure to issue the relevant requests for gas.

Mr Putin claimed: “They turned this [Yamal] route into reverse from Germany to Poland… Why?

“Because we supply gas to Germany under long-term contracts and the price is three to four, [even] six to seven times cheaper than on spot.

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“Just reselling one billion cubic metres one can earn $1billion.”

The Yamal reverse has quickly and unsurprisingly seen Europe’s gas prices rocket to record highs, with a 90 percent increase registered since December 1, costing €180.27 (£152.42) per megawatt-hour (MW/h).

The move, of course, also rose prices in Britain, with energy bills expected to grow as much as 50 percent. However, the crisis is expected to be less of an issue than on the bloc.

Peter McNally, Global Lead for Industrials, Metals & Energy at Third Bridge, described this as largely an “EU problem”.

Mr McNally told “Germany was making itself too dependent on Russian gas, and the reality is that Europe needs more gas in the short-term and Russia is one of the options.”

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