Gas price rise expected to reverse due to failure to resume gas pipeline in Russia
Archyde.com reported on the 4th (local time) that the European industry, which had been groaning because of the already lofty gas prices after Russia cut off European gas supply through Nordstream-1, is tense.
As Russia cut gas supply in retaliation for Western sanctions following the invasion of Ukraine, European gas prices have already soared 400% compared to last year, resulting in soaring electricity rates.
Russia recently conducted a regular inspection of the Nordstream-1 gas pipeline, and as previously announced by gas pipeline operator Gazprom, the prevailing view was that maintenance would be completed by the 3rd and resume operation of the gas pipeline.
As a result, on the 2nd, the Dutch TTF futures price, a benchmark of European natural gas prices, fell 40% from the highest price on August 26 (341 euros) to 200 euros per megawatt-hour (about 270,000 won).
However, as Russia, citing a gas pipeline failure, exceeded expectations and did not resume operation of the gas pipeline beyond the three-day maintenance deadline, natural gas prices are expected to rise again.
Leon Izbicki of Energy Aspects, an energy research firm, said, “In just two days, the market has been betting that gas pipelines will restart.”
Investtech’s Nathan Pfeiffer predicted in an interview with the British daily The Guardian that natural gas prices in Europe and the UK will hit all-time highs this week in the aftermath of the Nordstream-1 shutdown.
Northstream-1, which Russia has stopped operating, is a gas pipeline to Germany via the Baltic Sea and accounts for a third of Russia’s supply of gas to Europe.
Even before Russia announced the shutdown last week, the pipeline’s supply had fallen to 20% of its usual level.
European industry is already being hit by skyrocketing gas prices.
Electricity prices soared, and fertilizer and aluminum manufacturers had to cut production.
“The extent of the impact of a Northstream-1 shutdown will depend on how many European countries have secured alternative natural gas supplies,” said Jacob Mandel of Aurora Energy Research.
European countries accuse Russia of weaponizing gas, but Russia cites Western sanctions and technical problems for cutting gas supplies.
/yunhap news