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Gas prices slump as Putin boosts supplies to Europe

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Putin gas supplies Gazprom
Putin gas supplies Gazprom

Gas and power prices fell on Thursday after Vladimir Putin ordered Russian state gas supplier Gazprom to pump more gas into EU storages.

Prices in Europe dropped by 12pc following the Russian president’s order, while UK prices decreased more than 9pc to 198.70p per therm. 

During a call with officials late on Wednesday, Mr Putin told Gazprom’s chairman Alexey Miller to start filling the storage facilities in Austria and Germany once it has filled storage sites in Russia by 8 November. 

The UK imports little gas directly from Russia, but it does import from Europe, which gets about 40pc of its gas from Russia. UK prices closely track those on the continent. 

Prices remain about four times higher than average despite today's fall, however, with households and businesses stuck with rising costs. 

Watch: Energy crisis: Ofgem considers changes to price cap process as gas costs continue to challenge suppliers

  Gas markets in Asia, Europe and the UK have climbed more than four-fold this year amid a global supply crunch. 

Power prices have also risen due to gas's significant role in generating electricity. 

Russia has been accused of worsening the problem in Europe by not sending through gas supplies beyond its contracted volumes. 

Some manufacturers in Europe and Britain have already been forced to curb output. 

British household energy bills have gone up by an average £139 and are predicted to rise again in April, when the price cap is recalculated. 

Russia is concerned that too high prices could destroy demand, and would like to see them fall by about 60pc, sources told Bloomberg. 

Tom Marzec-Manser, an analyst at pricing agency ICIS, said that the timing of Mr Putin's comments could be connected to positive comments on Tuesday from Germany about certification of Russia's new Nord Stream 2 gas pipeline to Germany. 

Germany’s Economy Ministry said certification would not pose any risks to security of supply.

That move “will have been received positively in Moscow as it brings the new pipeline one step closer to operation”, Marzec-Manser said. 

He added: “Yet we still don’t know how much extra gas could arrive from Nov. 8 in response to President Putin’s instructions. 

“So a certain amount of risk needs to remain until flow profiles change.”

More gas being pumped in Norway and lower coal prices in China are also pushing the gas price down. 

Watch: What is greenwashing?

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