European gas prices surge as Russia announces Nord Stream 1 shutdown

Russia has drastically diminished pure gas provides to Europe in current weeks, with flows by way of the Nord Stream 1 pipeline at present working at simply 20% of agreed upon quantity.

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European pure gas prices surged on Monday after Russia’s state-owned vitality large Gazprom stated it will shut down Europe’s single greatest piece of gas infrastructure for 3 days from the top of the month.

The unscheduled upkeep works on the Nord Stream 1 pipeline, which runs from Russia to Germany by way of the Baltic Sea, deepen a gas dispute between Russia and the European Union and exacerbate each the danger of a recession and a winter scarcity.

The front-month gas value on the Dutch TTF hub, a European benchmark for pure gas buying and selling, jumped 19% on Monday to achieve 291.5 euros ($291.9) per megawatt hour.

The contract closed on Friday at a report excessive of 244.55 euros per megawatt hour, registering its fifth consecutive weekly acquire.

Gazprom stated Friday that the shutdown was as a result of the pipeline’s solely remaining compressor required servicing. Gas flows by way of the Nord Stream 1 pipeline shall be suspended for the three-day interval from Aug. 31 to Sept. 2.

Gazprom stated gas transmission would resume at a price of 33 million cubic meters per day when the upkeep work is accomplished “provided that no malfunctions are identified.”

The announcement of the momentary shutdown comes as European governments scramble to fill underground storage services with pure gas provides in a bid to have sufficient gasoline to maintain houses heat through the coming months.

Russia has drastically diminished pure gas provides to Europe in current weeks, with flows by way of the Nord Stream 1 pipeline at present working at simply 20% of the agreed-upon quantity.

Moscow has beforehand blamed defective and delayed tools for the sharp drop in gas provides.

Germany, nonetheless, considers the provision minimize to be a political maneuver designed to sow uncertainty throughout the bloc and enhance vitality prices amid the Kremlin’s onslaught in opposition to Ukraine.

Two grave dangers

Until not too long ago, Germany purchased greater than half of its gas from Russia. And the federal government of Europe’s largest financial system is now battling to shore up winter gas provides amid rising fears that Moscow might quickly flip off the faucets utterly.

What’s extra, Europe’s race to save lots of sufficient gas comes at a time of skyrocketing prices. The surge in vitality prices is driving up family payments, pushing inflation to its highest degree in many years and squeezing folks’s spending energy.

Holger Schmieding, chief economist at Berenberg Bank, stated Gazprom’s newest announcement was an obvious try to use Europe’s dependence on Russian gas.

“On its own, a brief closure of the pipeline would not make a major difference, especially as Russia has reduced its gas exports through NS1 to 20% of capacity since 27 July anyway,” Schmieding stated in a analysis observe.

(*1*) he added.

Schmieding stated increased prices for even scarcer gas provides would “worsen the serious recession into which Europe is falling already” and warned a right away additional minimize in Russian flows would elevate the probability that Germany could face a winter scarcity.

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