BERLIN - Pressure on Europe to secure alternative gas supplies increased
on Thursday as Moscow imposed sanctions on European subsidiaries of
state-owned Gazprom a day after Ukraine stopped a major gas transit route.

Gas prices surged, with the key European benchmark gaining 12% as buyers
were unsettled by the mounting threats to Europe's supply given its high
dependence on Russia.

Moscow has already cut off supply to Bulgaria and Poland and countries are
racing to fill dwindling gas reserves before winter.

Russia imposed sanctions late Wednesday mainly on Gazprom's European
subsidiaries including Gazprom Germania, an energy trading, storage and
transmission business that Germany placed under trusteeship last month to
secure supplies.

It also placed sanctions on the owner of the Polish part of the
Yamal-Europe pipeline that carries Russian gas to Europe.

Kremlin spokesperson Dmitry Peskov said there can be no relations with the
companies affected nor can they take part in supplying Russian gas.

The affected entities, listed on a Russian government website, are largely
based in countries that have imposed sanctions on Russia in response to
its invasion of Ukraine, most of them members of the European Union.

Germany, Russia's top client in Europe, said some subsidiaries of Gazprom
Germania were receiving no gas because of the sanctions.

If sanctioned firms cannot operate, other companies such as gas utilities
could take over contracts, which would likely involve agreeing new terms
with Gazprom, including for payment, said Henning Gloystein, director at
Eurasia Group.

Gazprom said it would no longer be able to export gas through Poland via
the Yamal-Europe pipeline after sanctions against EuRoPol Gaz, which owns
the Polish section.

Dutch gas prices at the TTF hub, the European benchmark, rose by as much
as 20% before closing 12% higher. The benchmark has skyrocketed over the
past year, adding to the burden on households and businesses.

Although German gas storage is around 40% full, that is still low for the
time of year and inventories need to be built up in preparation for winter.

Moscow's sanctions came just a day after Ukraine halted a gas transit
route, blaming interference by occupying Russian forces, the first time
exports via Ukraine have been disrupted since the invasion.

The Sokhranovka gas transit point will not be re-opened until Kyiv obtains
full control over its pipeline system, the head of operator GTSOU said,
adding that flows could be re-directed to the alternative Sudzha transit
point, although Gazprom has said this is not technologically possible.

There is also confusion still among EU gas companies over a payment scheme
decreed by Moscow in March which the European Commission has said would
breach EU sanctions.

Germany's top power producer, RWE, expects Berlin to soon clarify whether
payments for Russian gas can be made under Moscow's proposed scheme, its
finance chief said on Thursday, as a deadline approaches at the end of the
month.

Russia's demand for payment in roubles has been rejected by most European
gas buyers over the details of the process, which requires opening
accounts with Gazprombank, fuelling fears about potential supply
disruptions and their far-reaching consequences for Europe and
particularly Germany, which relies heavily on Russian gas.

https://www.zawya.com/en/special-coverage/politics-of-oil/europes-gas-supply-crisis-grows-after-russia-imposes-sanctions-kkrn98hj