Ukrainian gas transit to Europe fell by one-third, Hungary is indirectly affected

HUNGARY - In Brief 13 May 2022 by Istvan Racz

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The operator of Ukrainian gas pipelines stopped transiting Russian natural gas through a particular branch of its network on May 11, claiming the occurrence of a force majeure that made it impossible to continue its service. Gas TSO of Ukraine, the operator, said that it had lost control of its facility that is located on a territory occupied by Russian armed forces, which had resulted in unauthorised interference in technical processes and unauthorised gas offtakes from transit flows. GTSOU has notified Gazprom about the problem and offered an alternative route for transit. However, Gazprom has rejected the offer, saying that rerouting transit flows would be technically impossible, and denied the existence of the problems raised by the Ukrainian operator, also claiming that in their view, GTSOU experts would be fully able to work on the entire length of the transit pipeline in question.As a result, Ukrainian transit of Russian gas to Europe has fallen by up to 32.6 mcm or one-third of total. This represents about 8% of total Russian gas exports to the EU and about 2% of the EU's total use of natural gas. The Dutch TTF price of June 22 contracts of natural gas has risen to €101.6/mwh, as we are writing this note, from €94 on May 11. The lack of any bigger impact is due to the fact that the European heating season is effectively over. Hungary is not affected directly, as it currently does not import Russian gas through Ukraine, but it will be definitely affected indirectly, through higher gas prices on the European gas market, if the problem remains unsolved or similar cases occur in the future.Longer term, this incident draws attention to the existing very high operati...