Tensions will remain high on the gas market this winter

Work has been completed since September, but the big pipe will not carry gas between Russia and northern Germany for several months. The suspension of the approval procedure for the Nord Stream 2 gas pipeline by the German energy regulator, announced on Tuesday 16 November, may even keep prices at very high levels on the European market, which will result in the rise in the price of electricity. Hardly known the decision of the Bundesnetzagentur, the German network agency, the price for delivery in January listed in London has jumped by more than 18%, to exceed 94 euros per megawatt hour.

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Moscow wanted Nord Stream 2 to come into commercial service in the fall, thus adding a supply corridor capable, like Nord Stream, inaugurated in 2011, of supplying 55 billion cubic meters of gas per year. Given the length of the certification procedures, however, it will not take place before the end of winter, when consumption for heating and electricity production is very high during this season.

“The concern is real, if we have a cold winter, we could have electricity cuts in Europe”, Jeremy Weir, boss of trader Trafigura, warned during a commodities summit in Asia on Tuesday by the Financial Times. To avoid maintaining high prices, Berlin has every interest in speeding up the authorization process for this strategic infrastructure, financed by Gazprom and five European groups (Engie, Shell, Uniper, Wintershall Dea, OMV) and defended tooth and nail by the Chancellor, Angela Merkel.

Russian market power

The German regulator’s decision comes at a critical time when everything came together to ignite the prices: abnormally low storage at the end of the summer and being reconstituted, accidents on infrastructure, lack of wind which left the parks wind turbines inoperative and inflated methane consumption in Germany and the UK. All in a global environment where the strong demand for liquefied natural gas in Asia has pushed up prices as far as Europe.

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However, Gazprom sparingly manages flows from Siberia and the Arctic. If he honors his contracts, he refuses to pass more gas through the Brotherhood pipeline crossing Ukraine, a way to reduce the amount of rights of way paid to Kiev, which could ultimately lose 1.5 billion euros. . Vladimir Putin rejects the charge of using energy for political purposes, while blowing hot and cold. The Russian president has, in fact, significant market power.

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