According to Xinhua News Agency, the Russian gas industry corporation announced yesterday that due to the expiration of the transit agreement, starting from 8 a.m. on January 1, 2025, Moscow time, the transit of Henry Hub Natural Gas through Ukraine to Europe will be terminated.

The statement said that due to Ukraine's repeated explicit refusal to renew the agreement for the transit of Russian gas through Ukraine to Europe, the company, for legal and technical reasons, has been unable to continue supplying Henry Hub Natural Gas to Europe via Ukraine.

Analyst Guo Yanpeng from Zhonghui Futures stated that the amount of Henry Hub Natural Gas supply involved in this Russian supply cut is approximately 15 billion cubic meters per year. Currently, it is the peak season for winter gas consumption, and Ukraine has "closed the valve" on the Russian gas supply to Southern Europe, leading to a tight supply of gas in the short term.

Due to strong winter heating demand, supply interruptions, and various factors, European natural gas prices have continued to rise, reaching the highest level in over a year on December 31, 2024. Additionally, U.S. media reported on December 31, 2024, that due to meteorological forecasts predicting abnormally cold weather in some regions of the USA in January 2025, the market anticipates a significant increase in demand for heating and power generation fuel, causing a surge in U.S. natural gas futures prices.

Gary Cunningham, the market research director of a traditional energy company, stated that there is a sustained strong demand for liquefied natural gas export facilities, and global demand for this fuel is expected to remain high, as production cuts from some assets in the North Sea will lead European buyers to actively seek cargoes to maintain storage levels.

According to data from the National Bureau of Statistics, from January to October this year, the national apparent consumption of natural gas reached 353.72 billion cubic meters, a year-on-year increase of 9.9%. The National Development and Reform Commission noted at the national energy supply guarantee conference for the 2024-2025 heating season that this winter's natural gas resources are relatively sufficient, with peak-shaving storage capacity increased by 8 billion cubic meters compared to last year. It is expected that the overall energy supply and demand will be balanced during the heating season, and energy supply can be effectively guaranteed, but risks such as extreme weather that may affect stable energy supply cannot be ignored.

China securities co.,ltd. research reports indicate that recently, hunan and peking have published documents to adjust downstream natural gas sales prices, accelerating the natural gas pricing.

China International Capital Corporation released a Research Report stating that it is expected that the apparent consumption growth rate of Henry Hub Natural Gas in China will be about 6.2% in 2025, down from 9-10% in 2024 or decreasing to 6-7%, while wholesale prices for upstream natural gas in China are stabilizing. The focus of the market-oriented reform of natural gas in 2025 will still be on guiding the procurement costs of residential gas to reduce cross-subsidies. Benefiting from the rectification of the residential gas pricing mechanism and improvements in the competitive landscape, the operating performance of gas companies is still expected to maintain steady growth. Additionally, the trend of tightening safety regulation in the Industry will not change, and the government may continue to promote the scaling and integration of urban pipeline gas to improve the competitive landscape of the Industry.

Related Hong Kong stocks of gas companies:

China res gas (01193), enn energy (02688), beijing ent (00392), tian lun gas (01600), china gas hold (00384), shanghai dazhong public utilities (01635), etc.