Natural gas prices continue to surge, climbing to over $800 per thousand cubic meters, according to an article published by Ukrainian news outlet Novoe Vremya on Sept. 14.
These are the highest gas prices recorded in over three years. Europe is experiencing high prices due to curbs on supply. Russia had previously refused to pump additional gas to meet demand, fueling a scramble between players in the gas market as they sought to buy capacity for the winter.
The last time prices were this high was in March 2018, when low temperatures and heavy snowfalls boosted gas consumption in Europe.
Gazprom has only now begun to increase supply by pumping more gas through the Yamal pipeline, Russia’s main artery linking the Siberian gas fields to the European continent.
On the morning of Sept. 14, just a month before the transition to using underground gas stores, Russia increased the flow of gas through the Yamal pipeline to 3.3 million cubic meters per hour, compared with just 2.7 million cubic meters per hour a day before.
Supplies through the pipeline to Europe had previously dropped to just 20 million cubic meters a day in mid-August, causing prices to rally across Europe.
The reasons for this drop were previously unknown, however, many believe that Russia was deliberately manipulating the gas market to create demand for the recently completed Nord Stream 2 pipeline.
The project will allow Russia to send gas to Europe through the Baltic Sea and Germany, instead of Ukraine, which will lose at least $1.5 billion in transit fees per year. In May 2021, the head of Gazprom’s exporting division, Elena Burminstrova, suggested that Gazprom could “cover additional demand when Nord Stream 2 is commissioned.”
According to Ukrainian think tank Dixi Group, Russia has been throttling supply by refusing to use Ukrainian gas transportation networks, instead of relying on the TurkStream and Balkan Stream pipelines to isolate Ukraine.
However, Russian President Vladimir Putin appeared to blame European countries, accusing the European gas regulator of increasing prices.
Putin stated that long-term contracts with Gazprom had kept prices down for European countries who had agreed to sign them, noting that Gazprom sold gas at $220 per thousand cubic meters to Germany, while others were forced to pay $650.
“Those who agreed to sign long-term contracts with us in Europe can only rub their hands and rejoice,” Putin is reported to have said.
Rising gas prices are expected to put pressure on consumers, who will experience higher heating costs. Europe has been told to brace for an “expensive winter” as utilities prices have forced up inflation across Europe.
In Ukraine, rising global gas prices will incur large costs for the government. Nevertheless, Prime Minister Denys Shmyhal guaranteed that starting on Oct. 1, domestic electricity tariffs will be reduced by 80%, and that the price of natural gas for heating would be fixed throughout the heating season.
At the start of 2021, Ukraine faced numerous “tariff protests” after people got their energy bills for the 2020 winter season.
The cost of gas was reported to have reached up to 300 euros per 1,000 cubic meters of gas, outstripping average domestic monthly incomes in Ukraine.
