Eastward Flows Rise on Yamal-Europe Gas Pipeline

MOSCOW (Reuters) — Gas flows from Germany to Poland via the Yamal-Europe pipeline, which usually sends Russian gas west to Europe, increased on Wednesday, the 30th straight day that supplies have headed east.

The pipeline link between Poland and Germany has been operating in reverse mode since Dec. 21, generally adding to pressure on sky-high European gas prices.

The pipeline usually accounts for about one-sixth of Russia's annual gas exports to Europe and Turkey.

Reverse flows on Wednesday topped 10 million kilowatt hours per hour (kWh/h), up from around 9.4 million on Tuesday and overnight and around 7 million on Monday and at the weekend, data from the Mallnow metering point on the German-Polish border showed.

According to preliminary bids, flows are expected to remain at this level until Thursday morning.

Despite this, British and Dutch gas prices fell on Wednesday morning, weighed down by improving flows of Norwegian gas, strong supply of liquefied natural gas and mild weather forecasts.

The Dutch contract for February delivery, the European benchmark, was down 7.5 euros to 72.50 euros per megawatt hour (MWh). The benchmark price surged 260% in 2021.

Industry sources and market analysts say the unusual eastward flows are a sign European buyers are using up stockpiles to avoid paying high spot prices.

It is not clear when the pipeline will revert to westbound flows into Germany. A source close to Russian gas exporting monopoly Gazprom has said the company is expected to switch flows at some point this month, as it has paid for westbound volumes for January.

However, Gazprom has not booked any capacity to pump gas to Europe through the Yamal pipeline next month, underscoring a sharp drop-off in Russian exports to the region this year.

Gazprom's January gas exports are down 41% from a year ago and the company plans to focus on supplying long-term contracts and its own domestic market, Citi analysts said after meeting Gazprom officials last week.

Russia has denied accusations from a number of European policymakers that it is withholding gas supplies to pressure German and European authorities to give a green light to the newly-built Nord Stream 2 pipeline.

Germany signaled on Tuesday it could halt the Nord Stream 2 pipeline if Russia invades Ukraine.

The Kremlin said on Wednesday the fact no gas was being shipped through Nord Stream 2 was bad for gas consumers and economic development during the COVID-19 pandemic.

Capacity nominations for Russian gas flows from Ukraine to Slovakia via the Velke Kapusany border point, another major route for Russian gas to Europe, stood at 288,106 megawatt hours (MWh) on Wednesday.

That level was steady with nominations so far in January but down sharply from December levels and 60% below a year ago.

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