Russia says Ukraine terror attack on Turkey, EU energy link thwarted

Russia-Ukraine War: The Federal Security Service “prevented an attempt by the Ukrainian special services to commit a sabotage and terrorist act at the facility of the oil and gas complex that supplies energy to Turkey and Europe."

Russia’s security service said it thwarted a planned terror attack on infrastructure delivering energy to Turkey and Europe, raising concerns over supplies to the region.

Russia-Ukraine War: A man walks through the sports gym in the school which was used as a Russian military hospital in the recently retaken area of Izium, Ukraine. (AP)

The Federal Security Service “prevented an attempt by the Ukrainian special services to commit a sabotage and terrorist act at the facility of the oil and gas complex that supplies energy to Turkey and Europe,” according to a statement on its website Thursday. A Russian citizen was detained, who the nation’s security service claimed was recruited by Ukraine’s special service.

“We are not commenting on fantasies of Russian special services,” a representative of Ukraine’s State Security Service said.

The gas market is particularly sensitive to these kind of developments as Moscow has used disruptions at energy infrastructure in the past to justify curtailments to supplies. European gas prices swung between gains and losses, and were 2.8% higher as of 10:41 a.m. in Amsterdam.

The FSB didn’t provide any detail about what infrastructure it claims was targeted. The only route that supplies Russian energy both to Turkey and Europe is TurkStream, the pipeline across the Black Sea. Making landfall in Turkey, the link carries the fuel to a handful of European nations, including Serbia and Hungary, nations that are seen as “friendly” with Moscow.

“The market is possibly treating comments of that nature with a massive pinch of salt,” said Tom Marzec-Manser, head of gas analytics at ICIS in London. A potential for further disruptions in supplies from Moscow through other routes, not just the key Nord Stream pipeline that is currently shut, was already reflected in a price rally in August, he said. On top of that, TurkStream supplies EU markets that don’t have as big an impact on futures prices compared with those in northwest Europe.

Russia has already cut shipments to Europe through major pipelines, leaving TurkStream and capped transit flows via Ukraine as the last remaining routes. That’s some 80 million cubic meters of gas, or just about 20% of Russia’s normal exports to the continent.