European Gas Prices Soar As Russian Retribution Puts Kyiv in the Dark

European natural gas prices popped on Thursday amid Russia’s intensification of attacks on Ukrainian energy infrastructure, with Russia claiming to have destroyed Kyiv’s biggest power plant in an overnight missile strike.

The attack has so far led to power cuts in the Ukrainian capital and some regions that rely on power from Kyiv. 

Dutch TTF Natural Gas Futures May 24 contract gained over 8.5% on Thursday, while UK NBP Natural Gas Futures rose over 9.3%. 

Russia’s latest attack on Ukrainian energy infrastructure completely destroyed the Trypilska Thermal Power Plant (TPP), the largest supplier of electricity to three regions: Kyiv, Cherkasy and Zhytomyr regions. Ukrainian Centrenergo, which operates the plant, has said that it has lost 100% of its power-generation capacity.

While Ukrainian military sources told local media that the Air Force succeeded in shooting down nearly 60 of over 80 Russian drones and missiles launched at Ukraine, Moscow has made it clear that the retaliation for Ukraine’s targeting of refineries on Russian territory will be met with in-kind retribution.

Moscow has claimed that its latest strikes effectively disrupted operations of Ukraine’s military-industrial complex and has limited Kyiv’s ability to move troops and fuel supplies to the military. The retribution from Russia comes after a series of Ukrainian attacks on Russian oil refineries, with Reuters estimating that some 14% of Russia’s total refining capacity has been taken off line, prompting a rebuke from Washington, which is concerned that continued energy-targeted strikes will push up global oil prices.

Also driving European natural gas futures on Thursday were reports that natural gas flows into the Freeport LNG export plant in Texas had dropped to nearly nothing following issues with a liquefaction train, according to the BOE report.

By Charles Kennedy for Oilprice.com

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