This week looks rather paradoxical for the European gas market as it started with October Dutch TTF Gas futures prices surging to €245.92 per MWh from €214.67 per MWh at Friday’s close. This jump was expected as Russia’s Gazprom warned it would not resume gas deliveries via its Nord Stream 1 pipeline after the completion of three days of on-site technical maintenance on the pipe. The only turbine that was under maintenance from September 1 until September 3 was stopped due to oil leaks and is expected to be returned to German Siemens energy, a maintenance contractor.
On this news gas prices surged with a gap on Monday. Russia’s president spokesman Dmirty Peskov blamed European sanctions that are supported by the United Kingdom and Canada for the lack of Russian gas supplies. And that is where the price paradox comes in as gas prices failed to reach a previous all-time high at €346.52 per MWh that was last seen at the end of August when Gazprom first announced the three-day maintenance works that would be conducted on the only turbine that pumps gas via Nord Stream 1.
Now the European gas market looks very different and, on September 6 Dutch TTF October Futures prices dropped below €217 per MWh, although they slightly recovered during midday on Tuesday. And these paradox price movements could be considered rather expected as Gazprom has lost its status as a reliable gas supplier as it is interrupting its gas flow.. Siemens Energy said that oil leaks do not affect normal pipeline operations and they could be taken care of on-site without much fuss. “Such leaks do not normally affect the operation of a turbine and can be sealed on site," Siemens Energy said in a statement. The company said it is prepared to conduct on-site maintenance once it has been asked to do so.
So, it is clear that the Europeans were ready for such a situation to occur. Even a long-term complete shutdown of the Nord Stream 1 pipeline for any “technical” reasons would hardly contribute further to the negative impression that Gazprom has now created for itself as an unreliable supplier. Such a global shift in the attitude towards Gazprom has pushed the EU to push measures into motion which will diminish the dependency the union has on Russian pipeline gas supplies. A New Liquefied natural gas (LNG) terminal is emerging in EU ports as Europe increases LNG imports. Russian LNG supplies are growing too, as they are being resold by China. New interconnection pipelines between EU nations are being set into operation. Nuclear plants and coal power stations are being put back into operation. Steps towards green energy transformation are also accelerating while some austerity energy savings measures in EU nation that suggest a decrease in energy consumption up to 15% are close to be implemented.
Meanwhile, the EU has filled up its gas storages up to 80% of its maximum capacity ahead of schedule. All these measures have capped gas prices and may continue to limit them to €190-240 per MWh this week.
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