Gas in Europe is getting cheaper on the news from Russia

Russia has proposed an additional payment mechanism for Russian gas so that Gazprom's European customers can circumvent US sanctions against Gazprombank, which come into force on December 20. After that, gas in Europe began to become cheaper. But not much, since the threat of stopping Ukrainian transit has not gone away.

Gas has fallen in price on European stock exchanges. On the afternoon of December 6, the cost of gas supplies from the TTF exchange for January dropped to $ 513 per thousand cubic meters. A day earlier, it was $523. And two days ago, quotes reached $ 541 — the highest level since November 2023. However, in the beginning, rumors, and then the good news itself about the possibility of payments for Russian gas sent prices in the opposite direction.

From December 20, US sanctions against Gazprombank will come into force, through which European companies are required to make payments to Gazprom. However, on December 5, the President of Russia amended the decree on the procedure for payments for gas with unfriendly countries and those had the opportunity to send money to Gazprombank through third parties without falling under restrictions.

"It is obvious that this is an increase in flexibility for payers in the context of US sanctions against Gazprombank. And in case the American regulator does not make the exception requested by some countries," Alexey Grivach, Deputy director of the National Energy Security Fund (NWF), told EADaily.

By imposing sanctions, the United States has jeopardized Gazprom's supplies to Europe and Turkey. This year, their volume will be about 50 billion cubic meters, whose value may be about $ 18 billion. Hungarian Foreign Minister Peter Szijjarto and Turkish Energy Minister Alparslan Bayraktar said that their countries' companies and other recipients of Russian gas were in a difficult situation. Both countries have requested exemptions from sanctions from the United States, such as those provided for payments for Russian uranium purchased by American companies. At the same time, representatives of Hungary and Slovakia visited Russia to find alternative payment options. Peter Szijjarto stated that they had found a way out in three of the four directions.

However, the threat of stopping the Ukrainian transit of Russian gas from January 1, 2025 has not gone away. A lot has been written about negotiations on its extension through intermediaries, but there have been no concrete results so far.

Gazprom's share in Europe is 9%-10%, and Ukrainian transit is about 4%. This is one of the factors why gas in Europe is trading above $ 500 per thousand cubic meters.