As of: 07/11/2022 5:06 p.m
Prices on the European gas market fell at the beginning of the week. This may come as a surprise given the halted flow of gas through Nord Stream 1, but it follows a certain logic. However, the situation remains extremely tense.
With the maintenance of the Nord Stream 1 gas pipeline starting today, concerns about the security of supply in Germany have reached a new high. Like the Federal Network Agency, Federal Economics Minister Robert Habeck (Greens) spoke openly last week about the possibility that gas deliveries via the pipeline would then stop altogether.
Nevertheless, the players on the commodity markets seem to be reacting calmly at the beginning of the week. The trend-setting futures contract TTF Dutch fell significantly in the afternoon by more than three percent to prices below 170 euros per megawatt hour.
What is surprising at first glance follows a certain market logic. The maintenance date has been fixed for a long time, and the concern that Moscow could use the date to stop deliveries is not entirely new. Last week, the gas price had already reached its highest level since the beginning of March at EUR 177 per megawatt hour. Today’s price reaction is also typical for the occurrence of an expected event.
Gas markets remain extremely tense
Irrespective of this, the situation on the gas markets remains extremely tense. In the past four weeks, the trend-setting gas price has more than doubled. This price development will also be reflected in consumer prices with a certain delay, although experience has shown that it will not be to the same drastic extent.
The Nord Stream 1 pipeline transports 55 billion cubic meters of gas from Russia to Germany through the Baltic Sea every year. At the beginning of the maintenance work, bookings for the gas flow fell to zero as expected on Monday morning. Nobody can currently know what will happen after the maintenance, which usually lasts ten days, said the head of the Federal Network Agency, Klaus Müller, to Reuters TV. “In about ten days we will know if gas will continue to flow.”
But Germany is still getting gas, emphasized Müller. Russian gas is also routed west through Ukraine. The Russian energy company Gazprom announced that 39.4 million cubic meters of gas will be pumped west via the Sudzha border point on Monday, after 41.9 million on Sunday. Gazprom hasn’t routed Russian gas through the Yamal pipeline running through Poland for a long time.
“Everything is possible”
Federal Minister of Economics Habeck also expressed concern again on Monday. “Of course, our concerns are growing that Russia is clearly using gas supplies as a political weapon to drive up prices, unsettle markets and spread chaos,” he said during his talks with the governments in Prague on Monday and on Tuesday in Vienna.
According to Habeck, there must be greater European cooperation in securing the gas supply. Germany is aware that gas has to be shared between European countries in an emergency. It is completely unclear whether gas will flow again after the maintenance by Nord Stream 1. “Everything is possible.” Germany is preparing for the worst.