Gas prices in Europe soar as Nord Stream 1 pipeline flows remain at 20%, says Rystad

Gas prices in Europe have soared as flows from Russia through the Nord Stream 1 gas pipeline remain weak, compounding the region’s energy problems, according to a report by Rystad Energy.

Norwegian exports to the UK also fell due to a breakdown at the Sleipner export centre, which further put pressure on prices.

The European Title Transfer Facility – a virtual exchange point for natural gas in the Netherlands – first-month prices remained high at around $61.59 per million British thermal units (MMBtu) on Thursday, as Europe has revised its temperature forecast, according to the report.

Russian gas company Gazprom cut shipments on the Nordstream gas pipeline to Germany to 20% of capacity last month, citing problems with turbines. The move sent gasoline prices to the highest levels since March.

“TTF prices will continue at high levels as long as Russia’s gas supply appears to remain tight for the foreseeable future,” Rystad analyst Lu Ming Pang said in a note.

“The Nord Stream 1 pipeline continues to export gas from Russia to Europe at 20% capacity, or approximately 33 million cubic meters per day. [MMcmd].”

Gazprom claimed that Nord Stream 1 is only able to operate at 20% capacity, as only one in five compressors is currently in operation.

The current compressor transfer situation between Siemens and Gazprom has not yet been resolved, with Siemens claiming that Gazprom is still not facilitating the receipt of the compressor in Russia despite having all the relevant customs documents in place.

Gazprom said it needs additional documentation to ensure the compressor will not violate sanctions imposed by the European Commission.

EU countries are taking several steps to reduce gas consumption, both through an overall regional agreement and more specific measures taken by individual countries and companies, Rystad said.

Earlier this week, the EU’s plan to cut gas consumption by 15% between August and March came into effect as the bloc prepares for the winter months.

The final package is a compromise in which the reductions are initially voluntary and could become mandatory if enough countries request them. A number of members, including island states, can apply for exemptions.

The EU is currently struggling with a tight gas supply to fill storages to the agreed 80% by November 1, Rystad said.

Countries that typically depend more on the Russian pipeline, such as Germany and Italy, have set higher targets ahead of winter, with Germany aiming for 75% by September, 85% by October and 95 % by November.

Meanwhile, Italy has set a target of 90% by November.

Meanwhile, the United States overtook Russia as the biggest exporter of liquefied natural gas to Europe after the war in Ukraine, which led to Western sanctions on energy imports from Moscow.
Gas shipped from the United States now accounts for nearly half of Europe’s LNG imports, after a significant drop in the amount delivered by pipeline from Russia.

The United States supplied 47% of Europe’s total LNG imports in the first half of the year, according to figures compiled by the US Energy Information Administration.

Its analysis also showed that LNG imports into the EU and UK increased by 63% in the first half of 2022.
Source: National News

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