LONDON, March 31 (Reuters) - British and Dutch gas prices were mostly higher on Thursday morning ahead of an expected announcement from Russia unveiling its proposed mechanism for gas payments in roubles.
In the Dutch gas market, the May contract was 5.00 euros higher at 124.00 euros per megawatt hour (MWh) by 0813 GMT, while the April contract was 6.05 euros higher at 122.50 euros/MWh, having initially traded lower in early trade.
In the British gas market, the day-ahead price was 2.00 pence higher at 280.00 pence per therm.
"Prices have been rallying all week..there is still a lot of uncertainty about supply given the stand-off between Europe and Russia," a gas trader said.
Moscow is expected to make public its plans for rouble payments on Thursday, though the Kremlin has said customers will not be obliged to switch to roubles straight away as "payments and delivery is a time-consuming process".
Russian President Vladimir Putin told German Chancellor Olaf Scholz by phone on Wednesday that nothing would change for European partners and payments would still be made in euros and transferred to Gazprombank, which is not affected by sanctions, and then converted into roubles, a German spokesperson said.
"Scholz did not agree to this procedure in the conversation, but asked for written information to better understand the procedure," said the German spokesperson, adding that the previous Group of Seven agreement remained.
Russian daily Kommersant cited unnamed sources that Gazprom is looking at options for halting gas supplies to "unfriendly" countries and evaluating the possible consequences.
Analsyst at Fitch Solutions said a shut down of Russian gas to Europe is unlikely as it would hurt Russian producers and its financial coffers.
"The EU is Russia’s largest gas consumer and there are no other customers that could readily replace their demand," the analysts said.
"We do not expect Russia to shut off gas supplies, as it would be a major escalation from its previous position that this would be a response to an oil embargo," they added.
"If Russia were to shut off gas supplies, it would mark a serious step-change from Russia’s deference to long-term contracts as the model for gas supply agreements."
Russian gas via the Yamal-Europe pipeline resumed westward flows to Germany from Poland overnight, after halting for briefly yesterday, data from the Gascade pipeline operator showed.
Gazprom said shipments via Ukraine continued, with volumes at 109.5 million cubic metres.
The so-called summer gas season starts on April 1 when typically demand starts to decline. Pressure is building for gas to be pumped into storage during this summer.
The Dutch gas contract for Q2 was 3.25 euros lower at 116.00 euros/MWh.
In the European carbon market, the benchmark contract was 1.83 euros higher at 80.14 euros a tonne. (Reporting by Nina Chestney)