EUROPE GAS-Prices rises as Ukraine gas dispute adds to supply concerns

Sept 28 (Reuters) - Dutch and British gas prices mostly rose on Wednesday amid concerns that Russia could stop gas supply to Europe via Ukraine over a payment dispute, with flows via the Baltic Sea unlikely to resume after extensive damage to the Nord Stream pipelines.

The Dutch October gas price was up 16.10 euros at 200.10 euros per megawatt hour (MWh) by 0809 GMT.

The British equivalent was up by 24.75 pence at 290.25 pence per therm.

A warning from Gazprom that Russia could impose sanctions on Ukraine’s Naftogaz due to ongoing arbitration could have an immediate impact on European gas markets, analysts at ING bank said.

"This is an important development to watch because if Naftogaz is sanctioned, Gazprom will not be able to pay transit fees to the company for Russian gas which goes via Ukraine to Europe," they added. This risked the complete halt of flows and tighten up the European market further heading into the heating season, ING's analysts said. Russian gas flows via Ukraine have been steady at around 42 million cubic metres per day in recent weeks. Prices had already been buoyed by the discovery of large leaks in the Nord Stream 1 and 2 gas pipelines near the Danish island of Bornholm in the Baltic Sea, in what is widely regarded as an act of sabotage, although by whom or why remains unclear.

"Concerns over energy infrastructure safety could maintain a risk premium on winter prices in the short term," analysts at Engie Energyscan said.

Still, as Nord Stream 2 never started up commercial operation and flows via Nord Stream 1 effectively stopped since late August, the immediate impact of the attacks was limited, analysts said.

On the prompt, the British day-ahead contract rose by 30.00 pence to 225.00 p/therm.

"We observe tighter market conditions on notably higher residential consumption today and tomorrow," analysts at Refinitiv said.

The impact of the current cold snap in Britain was however mitigated by increased Norwegian flows and liquefied natural gas (LNG) supply, they added.

In the European carbon market, the benchmark contract was down by 2.59 euros at 65.37 euros a tonne.

(Reporting by Nora Buli in Oslo; editing by Nina Chestney)