Commodities Update — Gold dips; Wheat slides; Peru’s inflation at 24-years high; Russia expects $200bn China trade

RIYADH: Energy ministers from EU countries are holding emergency talks on Monday for a united response to Moscow’s demand that European buyers pay for Russian gas in roubles or face their supply being cut off.

Russia halted gas supplies to Bulgaria and Poland last week, after they refused to meet its demand to effectively pay in roubles.

Those countries already planned to stop using Russian gas this year, and said they could cope with the stoppage. Still, it has raised fears that other EU countries, including Europe’s gas-reliant economic powerhouse Germany, could be next.

It has also threatened to crack the EU’s united front against Russia amid disagreement on the right course of action.

With many European companies facing gas payment deadlines later this month, EU states have a pressing need to clarify whether companies can keep buying the fuel without breaching the EU’s sanctions against Russia over its invasion of Ukraine.

Moscow has said foreign gas buyers must deposit euros or dollars into an account at the privately-owned Russian bank Gazprombank, which would convert them into roubles. 

The European Commission has said that countries complying with Russia’s scheme could breach EU sanctions. It also suggested countries could make sanctions-compliant payments if they declare the payment complete once it has been made in euros and before its conversion into roubles.

After Bulgaria, Denmark, Greece, Poland, Slovakia and others last week urged clearer advice, Brussels is drafting extra guidance.

Czech Republic adds gas to state reserves to boost energy security

The Czech Republic has bought 2.4 terawatt-hours of gas for 8.5 billion crowns ($365 million) from majority state-owned utility CEZ to add to its state reserves in case of supply problems, the national reserves agency said on Sunday.

The central European country is nearly 100 percent dependent for its gas on Russia, which cut gas supplies to Bulgaria and Poland last Wednesday after they refused to pay it in roubles, sparking concerns other countries could be similarly hit.

“The Czech Republic is increasing its energy security with this purchase,” Pavel Svagr, head of the State Material Reserves Administration, wrote on Twitter.

It is the first time the state has bought gas reserves. The price paid includes transport and storage, and the volume amounts to around 2 percent of the country’s 2021 consumption.

The country also holds oil, and oil product reserves sufficient to cover its needs for three months.

Mexico’s opposition party pitches free solar panels for housing

Mexico’s biggest opposition party on Sunday proposed installing solar panels for free onto residential housing, staking out its renewable energy credentials, as it seeks to challenge the ruling party of President Andres Manuel Lopez Obrador.

Marko Cortes, leader of the center-right National Action Party (PAN), said the plan was to have state power utility Comision Federal de Electricidad and the government put panels for free on all homes, “starting with the poorest.”

“People wouldn’t pay anything or pay a lot less for their electricity bill,” Cortes said in a video on Twitter, urging the government to adopt the plan.

Lopez Obrador, a popular president who has dominated Mexican politics since taking office in December 2018, suffered a reverse in Congress last month, when the opposition united in voting down a constitutional overhaul of the power market.

Russian gas deliveries via Ukraine hit 5-month high

Daily nominations, or requests, for Russian gas deliveries through Ukraine into Europe via the Slovakian border point of Velke Kapusany rose to their highest since the end of November on Monday, data from Slovakian operator TSO Eustream showed.

Nominations via Velke Kapusany were at around 993,407-megawatt hours per day on Monday, the highest since Nov. 30, the data showed.

Flows of Russian gas to Germany through the Nord Stream 1 pipeline across the Baltic Sea were at 73,778,201 kilowatt-hours per hour by 0600 GMT, up from 72,286,105 kWh/h seen on Friday morning.

Eastbound flows into Poland at the Mallnow metering point on the German border stood at 13,202,832 kWh/h, little changed from levels seen late last week, data from operator Gascade showed.

Russia stopped gas supplies to Poland and Bulgaria last week for their refusal to pay in roubles, although Poland is still getting Russian gas via reverse flows from Germany along the Yamal-Europe pipeline. 

Finland’s Fennovoima ends Russian contract for nuclear power plant

Finnish consortium Fennovoima said on Monday it had terminated its contract with Russia’s state-owned nuclear power supplier Rosatom for the delivery of a planned nuclear power plant in Finland.

The planned Hanhikivi plant was commissioned by Fennovoima, a Finnish-Russian consortium, in which Finnish stakeholders including Outokumpu, Fortum and SSAB own two thirds and Rosatom’s subsidiary RAOS Voima holds the rest.

(With inputs from Reuters)