European gas declines as buyers ready to cope with supply risk

Bloomberg

Natural gas prices in Europe declined the most in a month with majors buyers in the region saying they can ride out the latest threat to Russian supply.
Benchmark futures fell 9.2%, and posted a weekly loss. Russian shipments through Ukraine have dropped this week, but stayed broadly stable — near the lowest since late April — based on data from the Ukrainian gas grid and a statement from Gazprom PJSC.
“If they remain around this level, the market could consider that the situation is manageable” and avoid overbidding for supplies, EnergyScan, Engie SA’s market analysis division, said.
Developments wreaked havoc on the European energy market after a period of relative calm brought by warm weather and a steady flow of liquefied natural gas.
Gas shipments to Europe via Ukraine were curtailed after a key cross-border entry point was put out of action because of troop activity on the ground. Moscow then issued counter-sanctions in retaliation for Europe’s penalties over the war in Ukraine, which curbed supplies to countries like Germany.
The reduction in flows are largely symbolic, and amounts to about 3% of Germany’s imports, Economy Minister Robert Habeck said. Austria said supplies that it is receiving through Ukraine were stable.
Moscow’s restrictions on a group of gas companies seized from its control by Germany also threaten to disrupt the global LNG market, upending a significant supplier Gazprom Marketing & Trading Ltd. In addition, the sanctions targeted a pipeline that crosses Poland, removing a potential backup route for European customers to receive Russian gas. The risks come just as payment deadlines for key European buyers become due this month under Russia’s new gas-for-rubles regime. This has been the biggest headache for the market in recent weeks, with Poland and Bulgaria cut off for failing to meet new payment demands. But a solution for others appeared to be emerging.
Companies including German giant Uniper were increasingly confident they could keep buying Russian supplies without breaching sanctions. Italy’s Eni hasn’t set up a ruble account yet, people familiar with the matter said, but the company is doing the legal work in preparation of setting one up if needed.