By Alexander Miller, consultant in energy markets. Eurasia Business news, August 25, 2022

The spot price of gas in Europe crossed $ 3,300 per 1 thousand cubic meters. Prices are growing by more than 10%, according to data from the London stock exchange ICE Futures. At the moment, the cost of the September futures on TTF on the exchange reached $ 3,312 per 1 thousand cubic meters. This is the maximum level since March 7, when a historical gas price of $ 3,898 per 1 thousand cubic meters was recorded. In early October last year, gas prices crossed $ 1,000 per 1 thousand cubic meters, a record since March 2018.

Between October 2021 and August 2022, gas prices in Europe grew by 231%.

The rise in gas prices in Europe is associated with heat and drought, which led to a decrease in electricity generation by wind turbines and a reduction in the transportation of coal along the waterway.

In addition, the price is affected by the planned shutdown of the Nord Stream gas pipeline for three days (from August 31 to September 2) for maintenance.

On August 19, Gazprom announced that on August 31 it would suspend the operation of the last of the six Nord Stream turbines for scheduled preventive work, in the absence of technical malfunctions, gas pumping will be restored in three days, on September 2.

Following this announcement, gas prices in Europe on August 19 jumped by more than 5% and for the first time since the beginning of March exceeded $ 2,700 per 1,000 cubic meters.

Gas prices in Europe are also affected by the growth of Asian futures for the supply of liquefied natural gas. On August 23, futures for autumn LNG in Asia for the first time exceeded $ 2100 per 1 thousand cubic meters.

On August 16, Gazprom submitted reports on the January-August period. Gas exports to non-CIS countries amounted to 78.5 billion cubic meters, a decrease of 36.2%. At the same time, exports to China continue to grow. According to the estimates of Gazprom, which it calls conservative, gas prices in Europe this winter will exceed $ 4,000 per 1 thousand cubic meters.

The Russian President Vladimir Putin announced on March 23 during a meeting with the federal government that payment for Russian gas supplies to European countries will be translated into Russian rubles. After initial refusal, many European countries agreed to pay for Russian gas in rubles. Those who decided to maintain their position against payments in rubles do not receive Russian gas anymore.

Russia’s gas supplies covered 40% of European Union’s needs in 2021. Russia also supplies about 27% of the 27-country bloc’s oil imports, and 46% of its coal imports. Taken together, that trade is worth tens of billions of dollars a year to Russia and enable European industry to work and produce goods and services.

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