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    TTF climbs further on Nov 12


Analysts believe Lukashenko's threat to halt Russian gas transit via Belarus is hollow.

by: Joseph Murphy

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Natural Gas & LNG News, Europe, Top Stories, Market News, Infrastructure, News By Country, Belarus, Russia

TTF climbs further on Nov 12

 The December gas delivery contract at the Dutch TTF hub saw a further gain in early trading on November 12, the day after Belarusian president Alexander Lukashenko threatened to cut off Russian gas transit to Europe.

The contract price fell early this week after Russia's Gazprom announced it had started sending gas to its storage sites in Europe, easing concerns of supply shortages ahead of winter. But it rebounded on November 11 to €74.80/MWh from €70.1 the previous day, and has risen again by 3% to over 77 ($88.1)/MWh in the current session, as of 09:30 GMT.

Lukashenko threatened to shut off gas transit via Russia on November 11 in response to potential EU sanctions. Brussels accuses Minsk of encouraging migrants from the Middle East and Africa to try and cross into neighbouring Poland, creating a border crisis.

"We are heating Europe, they are still threatening us that they will close the border," Lukashenko said. "And if we shut off natural gas there? Therefore, I would recommend that the Polish leadership, Lithuanians and other headless people think before speaking."

Analysts believe the threat by the Belarusian president is largely hollow, however.

"We do not think that Mr. Lukashenko would be able to stop gas transit via Belarus for a few reasons," Mitch Jennings, analyst at Moscow-based Sova Capital, told NGW. "First, the 100% owner of Gazprom Transgaz Belarus, meaning the Russian company controls the infrastructure and flow via Belarus. We also do not think that Russia would allow Belarus to disrupt flows, as Russia has material leverage over Belarus compared to Ukraine."

"We think this threat is unlikely to be carried out," analysts at VTB Capital (VTBC) agreed. "It would lead to the loss of transit income and commercial fines being levied on Belarus, as well as potentially broader repercussions for Russian-Belarusian relations."

The Yamal-Europe pipeline that runs through Belarus can handle up to 33bn m3 of gas annually, but in recent weeks it has been operating at considerably less than this capacity and has on some days halted westbound gas flow and instead made eastbound deliveries to Belarus from Poland.

VTBC said that were gas transit disrupted, Gazprom would be able to reroute supplies via Ukraine and the TurkStream.