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According to CCTV news on January 10, local time on January 9, Slovak Prime Minister Fico held talks with EU Energy Commissioner Jorgensen in Brussels. After the meeting, Fizo said the disruption of Russian gas supplies through Ukraine had hurt the economic interests of Slovakia and the European Union. If the gas transit problem is not resolved, the Slovak government will take severe countermeasures against Ukraine. Possible measures include halting humanitarian aid to Ukraine or cutting off electricity supplies in the event of an emergency. At the political level, Slovakia can also exercise a veto over some EU decisions.

Some analysts believe that the current "cut off gas" storm will further aggravate the antagonism between EU countries.

With the 2022 "Nord Stream" gas pipeline damaged by an explosion and lost its transmission capacity, the pipeline through Ukraine has become one of the main routes for Russian gas transmission to Europe.

As a landlocked country, Slovakia is highly dependent on the gas pipeline that passes through Ukraine. According to Slovak Prime Minister Fico, Ukraine's refusal to renew a gas transit agreement with Russia has pushed up gas prices and will also cost Slovakia 500 million euros a year in transit fees for gas supplies to the western EU.

In 2024, Gazprom delivered 15.5 billion cubic meters of gas to Europe via transit through Ukraine, most of which went to Slovakia, Italy, Austria and other countries, according to the company's announcement. On the one hand, the "cut-off" has caused distress to these countries with which Russia has signed long-term contracts, and on the other hand, it has had an impact on the European energy market as a whole.

On January 1, 2025, Russian energy giant Gazprom issued a statement saying that due to the expiration of the agreement with Ukraine on Russian natural gas transit through Ukraine to Europe, Gazprom has interrupted gas transmission at 8:00 Moscow time on the 1st. On the same day, the Ukrainian Energy Ministry said in a message on social media "Telegram" that it had stopped the transit of Russian gas due to national security considerations.

On January 8, local time, Slovak Prime Minister Fico issued a statement saying that Ukraine's cut off of Russian gas supplies may cause losses of nearly 1.5 billion euros to Slovakia and about 70 billion euros to the EU.

Gas prices soar in Europe

According to the Securities Times on January 9, the latest data show that, affected by factors such as unusually cold winter temperatures, the consumption rate of European natural gas reserves has reached a new high since 2018. At 70%, European gas inventories are below the average of 74.29% for this time of year over the past 16 years.

Meanwhile, European gas prices are soaring. According to Bloomberg News, as of January 5, the price of natural gas in Europe has exceeded 50 euros/megawatt-hour, the highest in more than a year. This is the highest price for gas in Europe since January 1, 2025, when the transit of Russian gas through Ukraine to Europe stopped.

Samantha Dart, co-head of global commodities research at Goldman Sachs Group, warned that below-average weather across Europe "is a more powerful driver" than transit disruptions, and that gas prices face "significant upside risk."

Dart says: "While transit deliveries of Russian gas to Europe via Ukraine are halted, we believe that the current forecast of colder than average weather over the next two weeks (more than 4°C below the ten-year average) is the main driver of tightening gas fundamentals in northwest Europe this winter," he said. Low wind production observed in December 2024 and disruptions in Norway also contributed to this."

Goldman Sachs expects the current forecast cold weather scenario to increase gas demand in Northwest Europe by more than 100 million cubic meters per day in January 2025. In the coming months, TTF (Dutch Gas Trading Center) prices will rise to the range of 63 euros/MWH to 84 euros/MWH, much higher than the base scenario of 40 euros/MWH under average weather conditions.

Goldman Sachs believes that the lower the inventory level at the end of March 2025, the more difficult it will be for the region to restock before the next winter. Under the current forecast cold weather scenario, assuming other factors remain constant, stock levels could fall to 30% at the end of March 2025, which means that stock levels at the end of October 2025 could fall below 80%, well below the 90% full load requirement, which would create a gap in the market of 21 million m3 / day in the summer of 2025.

In the face of tight gas supplies, Goldman Sachs says Europe has two main solutions:

1. Fuel conversion: With gas prices in Europe already well above the cost of coal-fired power generation, the next alternative source of demand is gas to oil (G2O), with prices ranging from €60 / MWH (fuel oil) to €78 / MWH (distillate fuel).

2, Increase LNG imports: In the case of rising natural gas prices, Europe is expected to increase imports of liquefied natural gas (LNG) to compete for resources from the Asian market.

In addition, Goldman said that in addition to the cold snap in Europe, there are other key drivers to watch next, including weather forecasts in Northeast Asia and the upcoming addition of liquefaction capacity in the United States.