By Alexander Miller, consultant in energy markets. Eurasia Business news, August 19, 2022
Gas prices in Europe during trading on Friday jumped by more than 5% and for the first time since the beginning of March exceeded $ 2,700 per 1,000 cubic meters, amid reports of the suspension of supplies via Nord Stream pipeline for three days due to the repair of the unit, according to data from the London ICE exchange.
The price of September futures at the TTF hub in the Netherlands rose to $ 2,712 per 1 thousand cubic meters, or € 261 per MWh (based on the current exchange rate of the euro to dollar, ICE prices are presented in euros per MWh).
The overall increase in the cost of gas per day is more than 8%.
Earlier, Gazprom announced that gas supplies via Nord Stream would be completely stopped from August 31 to September 2 due to the repair of the only remaining gas pumping unit. Upon completion of work and the absence of technical malfunctions of the unit, gas transport will be restored to the level of 33 million cubic meters per day.
Since July 27, the Nord Stream gas pipeline has been used at 20% of its maximum capacity due to the shutdown of several gas turbines. One of them – made in Canada by Siemens Energy – was sent to Montreal for repair operation. But due to Canadian sanctions against Russia, the manufacturer initially refused to return the repaired equipment to Germany. After numerous requests, Germany could obtain from Ottawa the delivery of the repaired gas turbine. On July 25, Gazprom had no choice but to announce the forced shutdown of another gas turbine engine at the Portovaya compressor station due to the end of the period of overhaul work.
The price of the October futures on the TTF spot gas index on the ICE Futures exchange on September 14 morning were 65.5 euros per kWh, or $ 800 per thousand cubic meters. Gas prices are now $ 2,700 per 1,000 cubic meters. The European economy is under great pressure since the European governments decided to reduce the Russian gas imports. Annual inflation reaches record every month in all the euro area state members. Euro area annual inflation is expected to be 8.9% in July 2022, up from 8.6% in June according to Eurostat, the statistical office of the European Union. Pressure increases on European families. A growing part of European citizens criticizes governments for their policy of sanctions against Russian energy and their inability to negotiate with Moscow. As they see their purchasing power falling since September 2021 because of the return of inflation, many European citizens cannot handle anymore the price increase and want their leaders to discuss with the Russian government about a ceasefire agreement in Ukraine and security guarantees in Europe.
Thus, only one turbine remains in working condition.
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