Will gas prices in Europe set a new record?

Analysts interviewed by Vedomosti disagreed on the gas price ceiling in the EU amid the suspension of Nord Stream 1.

Earlier Monday, European spot gas prices topped $3,000 per 1,000 cubic meters for the first time since early March. m, adding 15.7% to the previous trading session, should from London ICE data. The price of the September gas futures was 283 euros per MWh, or $3,030.9 per 1,000 cubic meters. m.

The record was set on March 7, when the cost of 1000 cubic meters. m of gas approached $3,900 after the start of a special military operation (SVO) on the territory of Ukraine. Then, within a few days, they decreased by almost three times and fixed at levels above $1,000 per 1,000 cubic meters. m.

The next local maximum gas prices in the EU reached after August 19 “Gazprom”warned of the imminent shutdown of the only operating gas compressor unit (GCU) at the Nord Stream entry point. The equipment will be stopped from August 31 for three days for maintenance and preventive maintenance. The repair should be completed on September 2, and, provided there are no malfunctions, gas exports via Nord Stream will be restored to the current level of 33 million cubic meters. m per day.

In mid-June, Russian gas exports via Nord Stream fell to 40% of the design capacity of 150.6 million cubic meters. m due to problems with the return of turbines from repair in Canada Siemens. Now the equipment is located in Germany. But Gazprom is not ready to take it because of legal uncertainty and fears that sanctions from the EU, the UK and Canada will not allow it to be operated in the Russian Federation, Vitaly Markelov, deputy chairman of the board of Gazprom, explained earlier.

The turnaround time was also suitable for other GCUs manufactured by Siemens at the Portovaya compressor station (CS) (in total, 6 such units were installed). Because of this, they were stopped one after another, and the volume of pumping through the Nord Stream decreased to 33 million cubic meters. m per day.

At current gas prices, the degradation of demand and the EU’s fuel saving measures will have too much impact on consumption, and this will not allow prices to renew their March highs, Sergey Kaufman, an analyst at FG Finam, believes. Recall that at the beginning of March 2022, after the start of the SVO, the cost of 1000 cubic meters. m on the TTF hub came close to $4,000.

Personal Broker “BCS The world of investments” Konstantin Pravosudov objects. “Problems with equipment on the Nord Stream gas pipeline, the closure of one of the two points of entry into the gas transmission system (GTS) of Ukraine and the complete shutdown of the Yamal-Europe pipeline due to sanctions “significantly contribute to record high gas prices in Europe” , he told Vedomosti. And with the approach of cold weather, according to Pravosudov, prices “may show new record highs.”

The expert noted that only supplies via Turkish Stream and Blue Stream through Turkey “are supposedly working normally,” but there is no publicly available exact data. And he added that the volume of Russian gas exports to Europe remains low and will decrease even more due to the maintenance of equipment for pumping gas through the Nord Stream.

Kaufman added that the EU is now, first of all, increasing imports of liquefied natural gas (LNG). “Other sources [поставок] so far have changed insignificantly relative to the lost volumes from Russia,” he adds. According to him, it is impossible to completely replace Gazprom’s pipeline gas supplies in a short time, therefore, in the first half of 2022, there was a noticeable decrease in gas consumption in the EU, which may intensify by the end of the year.

As Vedomosti wrote with reference to data from the International Energy Agency (IEA), in 2021, 155 billion cubic meters were supplied to the EU. m of gas, or 45% of all EU imports. BP estimated the share of Russian gas in the EU in 2021 at 40% of the consumption of this fuel.

Analysts at the Center for Energy Development (CRA) expect a correction in the gas market “in the next two weeks.” “So far, our baseline forecast is that gas prices in Europe will decline in early September to closer to $2,000 per 1,000 cubic meters. m. In October, prices may begin a new round of growth as the heating season begins, ”a representative of the center told Vedomosti. CRA analysts consider the losses of the European market due to the temporary shutdown of the Nord Stream “relatively small” – about 100 million cubic meters. m. They noted that this is about as much as Germany alone pumps into its underground gas storage facilities every day.