Gas prices rise as Russian pipeline stays in reverse after three weeks

MOSCOW: A pipeline that usually sends gas from Russia to Europe was stuck in reverse after three weeks on Monday, pushing up prices in Europe at a time of political tension between Moscow and the West.

Wholesale prices in Europe were up 6% on Monday as gas on the Yamal-Europe pipeline flowed east from Germany to Poland, adding pressure on the market along with lower wind output and weather outlook.

It has now been flowing eastwards since Dec. 21, data from German network operator Gascade showed. Industry sources and analysts said last month that traders were preferring to take gas from stockpiles to supply European buyers and avoid paying near record-high prices. As Russian gas company Gazprom has not seen bids for westbound exports, the pipeline has switched flows.

Ronald Smith, senior oil and gas analyst with Russian BCS brokerage, said European customers with prices linked to gas hubs - or central pricing points - “apparently not opting to take any more Gazprom gas than they absolutely have to.”

Russian energy exports have been in the spotlight during a diplomatic standoff between Russia and the West, including over a Russian troop buildup near neighbouring Ukraine, which is trying to forge closer ties with NATO.

US and Russian officials were holding talks in Geneva on Monday which Washington hopes can avert the danger of a Russian invasion of Ukraine, but diplomats on both sides sounded pessimistic before they began.

Some European Union lawmakers have accused Russia, which supplies more than 30% of the bloc’s natural gas, of using the crisis as leverage. They say Moscow has restricted gas flows to secure approval to start up the newly built Nord Stream 2 pipeline, which will supply gas to Germany.