Russia’s Gazprom shut down its main Nord Stream 1 gas again, citing maintenance, from Wednesday (August 31) to Saturday (September 3), leaving Europe at risk of whether Russia will restart supplies as scheduled guessing. Regardless of the outcome, officials and energy industry executives believe that high energy prices and possible shortages at any time will be a long-term challenge that Europe must face.
According to energy market intelligence platform Seeburger, Gazprom will shut down the Nord Stream pipeline from 1am GMT on Wednesday and is scheduled to resume supply at 1am on Saturday.
Gazprom also announced that it will cut off gas supplies to France’s Engie starting Thursday (September 1), citing that it has not yet received its fall fees, without further explanation.
Gazprom warned earlier this month that it would cut off the Nord Stream pipeline, but did not provide a clear timetable. Nord Stream 1 is an important pipeline for Russia to send natural gas to Germany, but it had previously reduced supply capacity to 20% because Russia claimed that the equipment was defective.
In July, Russia also suspended work for 10 days on the grounds of annual repairs. This time, the old trick is repeated, which has once again made people worry about whether the supply will be restarted as scheduled.
Europe is trying to prepare for a supply cut to Russia, German Chancellor Olaf Scholz said on Tuesday that Germany has decided to restore oil and coal-fired power generation, mandated gas reserves, leased floating liquefied natural gas (LNG) and more. Delaying the decommissioning of three nuclear power plants will help Germany through the immediate difficulties.
Belgian PM: Energy shortage will last five to ten years
Europe is expected to avoid the dilemma of gas rationing this winter due to the reduction in natural gas use and the advance of gas storage. But Europe will still face the same problems next year and beyond, as big gas producers like the U.S., Canada, Qatar, and the like won’t be able to keep up with demand, and Europe is pushing for decarbonization policies.
The Wall Street Journal (WSJ) reported that Western politicians and economists generally believe that Europe will continue to increase economic pressure on Russia, soEven if Nord Stream 1 restarts as scheduled on Saturday, Europe will not be able to rely on Russia to get enough natural gas next year, energy prices will remain high, and doubts about supply will linger.
Belgium is a major European LNG importer. Prime Minister Alexander de Croo said that Europe will face a five to ten year energy supply dilemma.
It will take at least two years for distant suppliers such as the US and Qatar to ramp up production to levels sufficient to meet European demand, and European countries have been reluctant to sign up to the long-term reductions in fossil fuel use they demand. long-term contracts. Since the start of the war between Russia and Ukraine, only Germany’s EnBW Energie Baden Württember has signed a long-term contract with the American Venture Global LNG Company.
In addition, although Canada is rich in natural gas, it is also unable to increase production because of ongoing climate policies, such as Quebec’s ban on new oil and gas development plans.
Benchmark gas prices in Europe rose to $100 per million Btu last week, a full 12 times their level a year ago, but have fallen this week as European storage appears to be close to meeting winter demand and European leaders pledged to take urgent action Interventions to ease the energy crisis, including capping electricity prices and finding ways to decouple electricity and natural gas prices.
In the short term, most of the LNG that Europe can get from the spot market comes from Asian buyers who have signed flexible long-term contracts with the United States. But in the long run, Europe needs to compete with Japan and South Korea for winter LNG. If China joins the competition, natural gas prices will only increase.
“There is no solution to the problem in Europe,” said Mario Levesque, president of Utica Resources, a Quebec gas explorer and developer interested in signing a supply agreement with Germany. “They have to find a way to reduce usage.”