Europe's TTF gas price surges by 28% as Russia launches Ukraine invasion

Europe's TTF gas price made huge gains in early trade Feb. 24 after Ukraine said Russia had launched a full-scale invasion of the country.

The TTF March price rose by as much as 35% in early trading, reaching Eur120/MWh, according to ICE data.

The March contract was 28% higher at Eur114/MWh as of 0730 GMT.

As well as the geopolitical implications of the escalation, the European gas market is concerned over potential disruption to Russian gas deliveries to Europe amid low storage stocks.

A total of 41.6 Bcm of Russian gas transited Ukraine to Europe in 2021, accounting for around 10% of European demand.

There remains a risk that Ukraine's vast pipeline network that carries Russian gas to Europe could be exposed during military action.

Ukraine's state-owned gas transmission operator GTSOU said Feb. 22 it was operating all its assets in "high-level" security mode to guarantee the delivery of Russian gas to Europe.

Under transit arrangements finalized in December 2019, Russia's Gazprom agreed to transit 65 Bcm of gas via Ukraine in 2020 and 40 Bcm/year in the period 2021-24, well down on a recent transit peak of 94 Bcm in 2017.

The agreement is under ship-or-pay terms, meaning Gazprom must pay Ukraine for the 110 million cu m/d of transit whether it ships the full volume or not.

Gazprom can also book more capacity on a short-term basis, but has not been buying significant additional capacity.