1 – The price of gas on the rise on the European market
The wholesale price of gas is starting to rise again on the European market. This is unpleasant news for the consumer, who does not (yet?) see the translation on their invoices. It reminds him of the sudden surge in the price of the molecule on the same European market in the aftermath of the Russian aggression on Ukraine, in February 2022, the tariff shield and the difficult exit from this protective device.
To date, the panic of the year 2022 is not in order. The Dutch TTF index, which serves as a reference – Holland is historically a gas producing country – had peaked at more than 230 euros per MWh in the summer of 2022 for forward delivery. On December 31, it closed the year at 48.89 euros after having exceeded the 50 euro mark during the day, its highest of the year. The combination of a cold period on the continent and the closure of a gas pipeline which transports Russian gas through Ukraine explains the heatwave.
2 – Zelensky refuses to renew the contract
It is the cessation of the transit of Russian gas through the Bratstvo gas pipeline – “Brotherhood”, in French – which is fueling fears. The pipe starts in Russia, passes through Ukraine and supplies central Europe. Despite the Russian-Ukrainian conflict, it has remained in service until now, thanks to a contract between Russian Gazprom and the Ukrainian oil and gas company Naftogaz. Signed in 2019, it expired on December 31, 2024. Volodymyr Zelensky, the Ukrainian president, did not wish to renew it.
The outcome deprives Ukraine, but especially Russia, of financial resources. Gazprom has been exporting around 40 million cubic meters of gas per day to Europe via Bratstvo in recent weeks. In 2023, the total rose to 14.64 billion m³. There remains one route, the Turkstream gas pipeline, on the southern route, under the Black Sea. The northern route, Nordstream 1 and 2, has not been used since the beginning of the war. It was sabotaged in September 2022.
3 – Europe in disarray
According to the European Commission, 40% of gas imports from the 27 member states came from Russia in 2021, before the outbreak of war. This share had fallen to 8% at the end of 2023. But this figure only applies to supply by gas pipeline. Europe has massively turned to LNG, liquefied natural gas, transported by LNG ships. If the United States has a preponderant share, Russia also supplies LNG, more expensive, to European countries. The two Russian sources combined (gas pipeline + LNG) represent almost 20% of European needs.
This addiction is all the more likely to continue as Europeans are disunited on the subject. Slovakia, very dependent on Bratstvo, is fiercely opposed to turning off the tap. Its head of government, the pro-Russian Robert Fico, went to Moscow on December 22. Viktor Orbán's Hungary receives Russian gas through Turkstream. Several other European countries remain closely dependent on it, such as Austria.
