The Ukrainian gas pipeline operator said on Sunday that the transmission of natural gas through its system was continuing “normally” and that there was no recorded pressure drop after an explosion in the area of Kharkiv, the country’s second-largest city. Ukraine’s Gas Transmission System Operator added that it was unable to visually inspect the site due to military activity in the city.
Ukraine is one of the main transport routes for Russian gas to Europe. Concerns about a distortion of the battle or set-up have pushed European gas prices to high levels, putting pressure on consumers and energy-intensive businesses.
Even before the fighting, Russian gas flows through Ukraine had declined as Russia’s monopoly Gazprom kept volumes low by historical standards.
Gazprom also said on Sunday it will continue to supply gas through Europe in accordance with customer requests, Russia’s TASS news agency said.
Oil and especially gas flows remain Russia’s main economic leverage for Europe, and Moscow can see more value in keeping volumes up at the moment than cutting off big customers like Germany and Italy.
European energy ministers are expected to meet on Monday to discuss rising oil and gas prices. On the table could be measures to reduce Europe’s vulnerability to gas market fluctuations, such as mandating higher levels of stored gas. Having enough storage space can alleviate supply shortages and make prices more flexible during times of high demand. However, analysts say gas prices are likely to remain high for a year or more.
Martin Young, an analyst at Investec, an investment bank, predicted that continued high gas prices could mean that UK consumers, just hit by a more than 50 percent rise in energy bills, could face a similar rise in the fall. .
On the oil front, OPEC Plus, the group of major oil producers that includes Russia, will meet on Wednesday to discuss production levels. The group is facing Western pressure to increase production to ease high oil prices, which briefly reached about $105 barrels on Thursday.
While the West has thus far been vigilant not to target Russian oil and gas exports with sanctions, British lawmakers are increasingly uncomfortable with BP’s nearly 20 percent stake in Rosneft, the London-based oil company, which the state-controlled company. †
British opposition politicians have called on BP to sell the stake it acquired in 2013, though it’s hard to see who else but the Russian government would buy it.
BP CEO Bernard Looney and his predecessor Bob Dudley serve on Rosneft’s board. The company’s CEO, Igor Sechin, is a longtime associate of President Vladimir V. Putin and has been the target of Western sanctions in the past.
