UK warns on Ukraine-led gas price rises

Gas price rises would become a reality in the event of a Ukrainian gas transit crisis this winter, according to UK energy secretary Ed Davey.  

The UK does not import Russian gas directly, but is connected to Belgium through the Interconnector pipeline. Russian gas transiting Ukraine meets the majority of demand in southeast Europe. About 38pc of Russian exports to western Europe transit Ukraine, most of which is delivered to Italy.

“Clearly, there could be some price effects which no-one can escape,” Davey said, but added that UK gas supplies were the most resilient in the EU.

“We have looked at our gas resilience to a range of very extreme scenarios, including things we hope do not happen in Ukraine and our gas supplies are extremely resilient,” he said.

The UK has gas supply from the North Sea, as well as pipeline imports from Norway and the Netherlands, and LNG imports from countries including Qatar and Algeria.

The EU today delayed for several days a ban on access by Russian state-controlled oil companies to EU capital markets. The measure, contained in a new package of sanctions, is now likely to be in force later this week. The new sanctions also avoid the gas sector.

Overall, European countries have ample gas supplies in storage and would likely easily weather a transit crisis for a short time. The most likely countries to turn to spot LNG would be Greece and Turkey because of their limited pipeline options and small gas storage.