Gas prices drop as Russia says sanctions will not affect gas payments from Europe

Alternative supplies via liquefied natural gas and warmer weather ease pressure on natural gas prices.

Gas prices drop as Russia says sanctions will not affect gas payments from Europe

The price of natural gas per megawatt-hour in Europe decreased 4.3% on Tuesday amid reports that Russia told European buyers that gas payments without violating sanctions will be possible.

For June trading on the Netherlands-based virtual natural gas trading point (TTF), the price per megawatt-hour in Europe fell to €89.75 ($94.83) at 09.38 local time (0638 GMT) on Tuesday from €93.78 ($99.09) on Monday's closing.

News that European countries could continue to make natural gas payments to Russia without violating sanctions supported the decline in prices.

The payment system involves opening two accounts with the authorized bank, Gazprombank, for the transfer of funds in euros or dollars. Gazprombank will sell the foreign currency at the Moscow Exchange MICEX-RTS and transfer the ruble proceeds to the buyer's ruble-denominated special account.

Gazprombank will then transfer the ruble funds from the buyer's account to Gazprom's account in Gazprombank.

Russian energy firm Gazprom halted gas flow to Poland citing non-compliance with gas payments via the rubles system.

The reliance on more liquefied natural gas as an alternative to natural gas, coupled with warmer weather in the spring and coming summer months is helping relieve pressure on natural gas prices.

Hüseyin Demir

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