LONDON: European gas buyers already struggling with record prices face further difficulties when markets open on Monday (September 5) after Russia said one of its main supply pipelines to Europe would remain closed indefinitely, sparking fears of energy rationing.
Falling gas flows from Russia before and after its invasion of Ukraine in February has already driven European prices up nearly 400% in the past year, sending gas costs skyrocketing. electricity.
Europe has accused Russia of arming energy supplies in what Moscow has called an “economic war” with the West over fallout from the Ukraine conflict, while Moscow blames Western sanctions and technical issues for disruptions supply.
The Nord Stream gas pipeline, which runs under the Baltic Sea to Germany, historically supplied around a third of the gas exported from Russia to Europe, but was already operating at just 20% capacity before flows were halted last week last for maintenance.
Expectations were high. State-controlled Russian energy giant Gazprom would restart flows at 20% after the latest shutdown, causing Dutch TTF gas benchmark prices to fall by around 40% from the record high of 26 August to close at just over €200 (US$199). ) per megawatt hour on Friday.
But after Russia scrapped the deadline for resuming flows on Saturday, saying it had discovered a fault during maintenance, prices are set to rise again, analysts said.
“On Friday … the market was already pricing in the return of Nord Stream 1 (NS1) flows,” Energy Aspects gas analyst Leon Izbicki said. “We expect a significantly stronger opening for the TTF on Monday.”
Skyrocketing electricity costs linked to soaring gas prices have already forced some energy-intensive industries, including fertilizer and aluminum makers, to cut production, and led EU governments to inject billions in household assistance programs.
The impact of the latest cut will depend on Europe’s ability to attract gas from other sources, said Jacob Mandel, senior commodity partner at Aurora Energy Research.
“Supply is hard to come by and it’s getting harder and harder to replace every bit of gas that doesn’t come from Russia,” he said.