the closure of Nord Stream 1 leads to a further spike in Gas prices soar over 30%

The decision of the Russian national company Gazprom to interrupt deliveries for longer via the Nord Stream 1 gas pipeline leads to an increase of more than 30% in European gas on Monday( Gas prices ). For its part, the Kremlin ensures that it is the only fault of the West, because their sanctions prevent the maintenance of gas infrastructures. European Union energy ministers are due to meet on September 9 to discuss measures to contain soaring prices.

The respite was short-lived. Europe’s benchmark gas price climbed 30% to 272 euros per megawatt hour on Monday when the market opened, regaining much of the ground lost last week. The price of gas had indeed declined significantly, falling by more than a third to end up at 210 euros per megawatt hour on the reference market, the Dutch TTF. It had come close to its historic record of 345 euros per megawatt hour on August 26. At the start of the year, it was hovering around 70 euros.

The trend on the gas market has thus been abruptly reversed, after Gazprom’s decision to “completely” shut down the Nord Stream 1 gas pipeline, which supplies Europe. What revive fears of shortage and rationing of gas in the European Union this winter.

“Europe has done a very good job over the last two months maintaining high levels of gas storage and diversifying imports, but if Russia no longer supplies gas, it is likely that we will not be able to pass winter without noticeable restrictions or rationing,” the Deutsche Bank analysts write.

Stopping Russian gas deliveries is the fault of Western sanctions, says the Kremlin.

Brussels accuses Moscow of using the gas as an economic weapon in retaliation for sanctions targeting Russia after the invasion of Ukraine in February. For its part, the Kremlin affirms that the stoppage of Russian gas deliveries to Germany, via the strategic Nord Stream gas pipeline, is the sole fault of the West, because their sanctions prevent the maintenance of gas infrastructures. “The problems of pumping (of gas) appeared because of the sanctions of the Western States. There is no other reason for these problems,” Kremlin spokesman Dmitry Peskov said.

Nord Stream 1, which passes under the Baltic Sea to reach Germany, historically supplied around a third of the gas exported by Russia to Europe, but it was already operating at only 20% of its capacity before the flows were interrupted last week. The volume of Russian gas routed through Ukraine has also been reduced.

A massive help plan in Germany.

Soaring energy prices are putting pressure on households and have already forced some companies, including fertilizer and aluminum makers, to shut down production to meet rising production costs. In France, Duralex will stop for four months and put 250 employees out of work.

To counter this inflation, Germany will resort to massive aid. The coalition of SPD, Greens and FDP has agreed on additional financial relief for households and businesses, totaling 65 billion euros. Retirees will notably receive a single payment of 300 euros, and students 200 euros. In addition, the executive wants the exceptional profits made by certain energy companies thanks to the surge in prices to be used to relieve household bills.

At the European level, EU energy ministers are due to meet on September 9 to discuss measures to contain the price spike. There should be talk of options such as a cap on the price of imported gas, a cap on the price of gas used to generate electricity or the temporary withdrawal of gas-fired power plants from the current European electricity pricing system. ‘electricity.

Contact us