HomeNewsEurope gas prices vulnerable to Ukraine transit stop, says TotalEnergies CEO

Europe gas prices vulnerable to Ukraine transit stop, says TotalEnergies CEO

8/26/2024

The future of Russian gas transit through Ukraine remains a key uncertainty for European gas prices, even as the continent heads into the winter with full storages, the CEO of TotelEnergies said on Monday.

A transit agreement to deliver Russian gas to Europe via Ukraine, which last year still totaled 15 Bm3 out of total EU gas consumption of 295 Bm3, is due to expire at the end of the year.

Ukraine has said it will not extend the deal. There is also some concern that flows could stop prematurely amid fighting in the Kursk region of Russia, where the gas transit point into Ukraine, Sudzha, is located.

"One of the main factors is about this transit for Ukraine because even if the storage are full, I'm not sure we are fully covered if this is interrupted," Patrick Pouyanne said in an interview on the sidelines of an energy conference in Norway.

European gas storage levels were last seen 91.2% full, having hit a Nov. 1 target two months early, Gas Infrastructure Europe data showed.

The gas market in Europe will continue to be exposed to volatility as there is not much new supply to be added, Pouyanne added, highlighting delays to new liquefied natural gas (LNG) projects like Golden Pass in the U.S.

"So we are still in a phase where we don't have much margin on the supply for energy," he added. This situation was likely to prevail until 2027, the CEO said.

The benchmark front-month contract at the Dutch TTF hub traded at €37.03 per megawatt hour (MWh), according to LSEG data. The price had risen above €40 to its highest since December earlier this month over fears the transit could stop amid the fighting in Kursk.

 

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