Page 9 - FSUOGM Week 36 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

Russia's indefinite closure of Nord Stream

1 triggers another price spike

RUSSIA NATURAL gas prices surged on September 5 as and introduce measures such as rationing.
markets opened following Gazprom’s announce- European energy ministers are set to discuss
Russian gas supplies ment that it had suspended gas flows through radical proposals to curb power prices when they
to Europe were already Nord Stream 1 indefinitely before the weekend. hold a special meeting on September 9, including
down to 3.4 bcm in Gazprom announced it was closing Nord gas-price caps and a suspension of power deriva-
August. Stream 1 down after reporting a leaky oil value tives trading, reports Bloomberg.
after the Dutch TTF gas spot market closed on Dutch front-month gas, a benchmark for
Friday, September 2 for the weekend. Gas prices Europe, was 26% higher at the opening of trad-
had tumbled in the previous days after Germany ing on September 6 in Amsterdam at €270/MWh
announced a €65bn relief package for consum- ($2,675 per thousand cubic metres).
ers in the face of the mounting energy crisis in
Europe. Uncertain outlook
But that relief was quickly wiped out follow- Russia will keep Nord Stream 1 closed indefi-
ing Gazprom’s decision. Benchmark futures nitely until technical problems at the pipeline’s
jumped as much as 35% after the decision, which compressor station can be resolved, Gazprom
was widely seen as a political reaction to the G7 reported late on September 2, confirming the
finance ministers' decision to go ahead with an worst fears of European leaders and energy mar-
oil price cap scheme announced on September 2 ket players.
that is designed to cut the Kremlin off from sky- The announcement triggered another spike
high oil export revenues. in gas prices that, coupled with an associated
With gas storage tanks already over 80% full, surge in power prices, will push Europe further
hitting the target set by the European Commis- into recession, which is now inevitable, accord-
sion at the start of the Ukraine war a full month ing to Robin Brooks, the chief economist at
early, Europe will still need to import gas all Institute of International Finance (IIF). The UK
winter, as gas storage tanks in Europe are not is one of the worst affected economies in West-
big enough to last a whole winter without some ern Europe, despite being one of the least reliant
imports from Russia. on Russian gas, and is believed to already be in
Gazprom’s decision takes Europe a step closer recession.
to increase the European energy crisis status to Nord Stream 1 was supposed to return to
“emergency” level, the third in a three-step sys- operation on September 3 after a three-day joint
tem, that gives governments emergency powers maintenance inspection, conducted with Ger-
to take control of remaining energy resources many’s Siemens, the developer of the turbines

Week 36 09•September•2022 www. NEWSBASE .com P9