Russia’s Gazprom warns European gas prices could climb a further 60 percent

Russian state gas company Gazprom said on Tuesday that European gas prices could spike by 60 percent to more than $4,000 per 1,000 cubic meters this winter, as the company’s own export and production continues to fall amid Western sanctions.

Gas flows from Russia, Europe’s top supplier, are running at reduced levels this year, after one route was shut when Moscow sent troops into Ukraine in February and after sanctions triggered a dispute about the Nord Stream 1 pipeline’s equipment. Gas prices have surged as a result.

“European spot gas prices have reached $2,500 (per 1,000 cubic meters). According to conservative estimates, if such a tendency persists, prices will exceed $4,000 per 1,000 cubic meters this winter,” Gazprom said.

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Dutch wholesale gas prices hit an all-time high of nearly 335 euros per megawatt hour (MWh) in spring. They have dipped since then to around 226.00 euros per MWh on Tuesday but remain far higher than a year ago when they were about 46 euros per MWh.

Kyiv has shut one of Gazprom’s routes for exports to Europe, while Gazprom has reduced supplies to only 20 percent of the capacity of the Nord Stream 1 pipeline to Germany amid the equipment dispute.

Overall, Gazprom’s gas exports fell by 36.2 percent to 78.5 billion cubic meters between January 1 and August 15 and production was down by 13.2 percent to 274.8 billion cubic meters comparing to a year ago, it said in a statement.

Gazprom’s output was down by 32.2 percent so far in August versus a fall of 35.8 percent in July in annual terms, Evgeniy Suvorov, an economist at CentroCreditBank, said on his Telegram channel MMI, adding that export was down by 59 percent from minus 58.4 percent last month.

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