Ukrainian decision to halt natural gas transit from Russia to European consumers will cause Asian LNG rate to escalate
(MENAFN) Ukraine’s decision to halt natural gas transit from Russia to European consumers is expected to escalate liquefied Natural gas (LNG) prices and intensify competition for alternatives between Europe and Asia. Following Ukraine’s stance to cease dealings with Moscow, Russia officially suspended gas flow through Ukraine to the EU on January 1.
Scott Darling, a managing director at Haitong International Securities, highlighted that this disruption will further constrain the LNG market, leading to higher prices in the coming months. Europe now faces the challenge of replacing approximately 5% of its gas supply, with increased reliance on storage. However, current storage levels are below average for this time of year, adding pressure on European gas supplies.
While this halt had been anticipated after months of negotiations, the move has caused a spike in natural gas prices, with European gas benchmarks climbing over 50% by year-end. The impact of the disruption on LNG prices has not fully materialized yet.
Countries like Slovakia, which depends on Russian gas via Ukraine for nearly 60% of its energy needs, and Moldova, where Russian gas powers much of its electricity generation, are expected to face significant challenges. Although Russia can still supply gas to Europe through the TurkStream pipeline and LNG shipments, the overall market will likely remain tight.
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