Natural Gas Price Rises In Europe On Nord Stream1 Maintenance

European natural gas prices surged for a second trading day as investors, market participants and traders are watching Russia’s Nord Stream 1 pipeline on maintenance, speculating when it could be completed and thereafter reopened.

The pipeline was shut for planned maintenance that is scheduled to last for 10 days, but Germany expressed serious concerns that Russia may not fully return the facility into service. Deliveries from Gazprom PJSC have been curbed for weeks, both via Nord Stream and Ukraine.

All the involved players have now voiced their thought about the dangers of energy dependency on Russia. There are some realities to keep in mind. First, even the best-intentioned emergency plans to deal with a possible stoppage of Russian gas supplies may bring about severe social results. If the German government does not deal quickly and proactively with such risks there is the chance of a real social conflict with very serious impact.

Nord Stream 1 pipeline is traditionally the path through which Germany normally receives more than half of its natural gas supplies. This servicing takes place every two years and normally gives no reason for alarm. The pipeline needs to be emptied for the service to take place, but normally sufficient natural gas volumes are kept in storage for this occasion.

What is particularly different this time is that not only many gas storage facilities are not refilled after the winter, but also Rehden gas facility is nearly empty. With storage behind target, there is increased uneasiness about what may happen in case Gazprom decide not to resume supplies through Nord Stream 1.

A tough game has begun in Europe after Russia’s attack on Ukraine in February. Who will scream first? Will it be the EU by detaching from natural gas purchases from Russia, or Russia by stopping supplies? How did Germany get into this situation of depending mainly on one supplier and one means of transportation for its natural gas?

On the US front, natural gas stabilized down by -2.91% at 497.8 as the gas market followed an 8% drop in oil prices. This price decline came even though daily gas output dropped and amid forecasts for hotter weather and more demand over the next two weeks than previously expected.

US traders noted the ongoing outage at Freeport LNG’s liquefied natural gas export plant in Texas has left more gas in the United States for utilities to refill low stockpiles for the winter.