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Europe’s missteps stoke gas price, says Russia, as fuel flows east

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Europe is paying record gas prices because of its failure to sign long-term supply contracts and could ease the pressure by ending delays to the Nord Stream 2 gas pipeline that runs from Russia to Germany, a top Russian official said on Friday, according to Reuters.

Europe’s benchmark gas price climbed to a new record on Tuesday, up almost 800% since the start of the year. The price eased on Friday but it was still up more than 400%.

Adding to the squeeze, the Yamal-Europe pipeline that usually sends Russian gas to Western Europe was flowing in reverse for a fourth day on Friday, pumping fuel from Germany to Poland, data from German network operator Gascade showed.

Russian President Vladimir Putin said on Thursday that Germany was reselling Russian gas to Poland and Ukraine rather than relieving an overheated market.

The surging gas price comes amid rising tension between Moscow and the West over Ukraine and a long-running dispute over Nord Stream 2, which has been built but has yet to start commercial operations to supply Russian gas.

The project is opposed by the United States and particularly several east European states, which say the pipeline will make the European Union even more reliant on Russian gas, which already supplies 35% of European Union’s gas needs.

In Ukraine, another transit route for Russian gas to Europe, the head of state gas transmission operator said Russia’s Gazprom had reduced daily gas transit across Ukrainian territory to 87.7 million cubic metres (mcm) from 109 mcm.

“The reduction in gas supplies to the European Union at a time when prices reached $2,000 suggests that these are not economic decisions but purely political ones, aimed at increasing pressure on the EU to launch Nord Stream 2 on terms of the Russian Federation,” Sergiy Makogon wrote on Facebook.

The benchmark European gas price soared above 2,200 euros ($2,495) per 1,000 cubic metres on Tuesday.

Russia has repeatedly dismissed charges it has played politics over gas and says it is meeting all the amounts it is contracted to supply. Companies with supply deals have also said their contracts have been met.

Russian Deputy Prime Minister Alexander Novak said Europe was missing out on additional Russian supplies because of delays to Nord Stream 2, which still needs German approval to start up.