Natural gas prices in Europe could top $3,000 per thousand cubic meters, according to Gazprom, cited by Russian news agency Interfax, which would be above a proposed safety price ceiling for the benchmark European gas futures.
Last week, the European Commission proposed a new EU instrument to limit excessive gas price spikes, consisting of a safety price ceiling of $285 (275 euros) per megawatt hour (MWh) on the month-ahead derivatives at the Title Transfer Facility (TTF) hub, the benchmark for the European gas price.
The 275 euros/MWh price equals around $2,950 per thousand cubic meters.
The proposed EU mechanism of a "safety price ceiling" would be triggered automatically when both of the following conditions are met- the front-month TTF derivate settlement price exceeds 275 euros for two weeks; and TTF prices are $60 (58 euros) higher than the LNG reference price for 10 consecutive trading days within the two weeks.
The TTF prices eased on Monday to below $124 (120 euros) per MWh, after Gazprom withdrew last week's threat to halt supplies to Moldova via Ukraine.
Last week, Gazprom said it could begin reducing natural gas supply to Europe via Ukraine as of November 28 after noticing that part of the volumes through Ukraine were not reaching Moldova. Gazprom said that it had noticed some of the gas intended for Moldova under a contract with the local gas firm was being diverted by Ukraine. If the imbalance in gas transit continues, Gazprom will start reducing gas flows via Ukraine on the morning of November 28, it said.
Moldova and Ukraine accused Gazprom of "blackmail" for threatening to reduce gas supply.
Gazprom said yesterday that Moldovagaz had paid, belatedly, for Russian gas deliveries for November, and therefore, "it was decided not to reduce gas supplies to the Sudzha entry point for transit to Moldova."
Gazprom accused the Moldovan company of regularly violating the payment obligations and warned that it could "reduce or completely suspend gas supplies" if Moldova fails to pay for them.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More