European benchmark natural gas prices surged 28% on Monday morning to reach €274 ($272) per MWh. This is the first day of trading after Russian energy giant Gazprom claimed that a key node he had indefinitely stopped flow through the Stream 1 pipeline and discovered an oil leak. in the turbine.
Last year, the pipeline supplied about 35% of Europe’s total gas imports from Russia.However Gazprom from June The flow along Nord Stream 1 has been reduced to just 20% of its capacity, citing maintenance issues and controversy over the loss of a windmill embroiled in Western export sanctions.
Moscow’s decision not to reopen the pipeline on Saturday has raised concerns that the European Union could run out of gas this winter despite successful efforts to fill storage tanks. Wholesale natural gas futures rose more than a third on Monday on concerns about
Euro falls on Friday news of pipeline indefinite closure Less than $0.99 Monday — Lowest level in 20 years.Pound hits $1.14, his lowest since 1985 On local economic activity and government budgets.
Some countries are preparing large sums of money to contain the pain.
On Sunday, the German government announced a €65 billion ($64 billion) rescue package to help households and businesses cope with a spike in inflation. Germany, Europe’s largest economy, relies in particular on Russian gas exports to power its homes and heavy industry.
Together with the measures so far, the total government aid will be €95 billion ($64 billion), about 2.5% of Germany’s GDP, Berenberg chief economist Holger Schmieding said in a note Monday. said to do.
Liz Truss, who will succeed Boris Johnson as Britain’s prime minister this week, is under tremendous pressure to announce more aid to homes and businesses amid skyrocketing energy prices.
The Sunday Times reports that Truss is considering a £100bn ($115bn) package, including utility payments, to help with rising costs of living.
If so, that would be about £30bn ($34bn) more than the cost of the country’s pandemic furlough scheme, which the government has subsidized workers’ salaries to prevent mass layoffs.
winter preparation
The European Union has been building up its energy reserves for months to prepare for the colder months when usage spikes, fearing Russia will cut gas supplies even further.
Russia’s gas supply to “unfriendly” European countries and energy companies that refused to pay gas bills in rubles instead of euros or dollars as stated in contracts, as Russia claims have already stopped.
Nord Stream 1’s announcement on Friday said G7 countries agreed to limit the price at which Russia can sell oil to limit the revenue the Kremlin is using to fund the war in Ukraine. It happened just a few hours later.
spokesperson for siemens (GCTAF)German manufacturer of the reportedly faulty Nord Stream 1 turbine.
“Irrespective of this, we have already noted several times that the Portovaya Compressor Station has enough additional turbines to run Nordstream 1,” a spokesperson told CNN Business.
As the energy conflict escalates, EU countries are quickly filling up their gas storage facilities. Stores are currently filled to 82% of capacity, according to Gas Infrastructure Europe data. This is over 80% of the target the authorities have set for each country to reach him by November.
“Despite the serious risk of energy shortages, large parts of Europe expect to be able to weather the cold season without shutting down significant parts of their industry due to massive rationing of gas supplies.” said Schmieding in a note.
But European leaders recognize that more needs to be done to avoid widespread difficulties and limit the impact of the recession. EU energy ministers hold emergency meeting On Friday, we will discuss plans to protect Europeans from the worst of energy price hikes.
Initial ideas include a mechanism to decouple electricity prices from wholesale natural gas prices and provide emergency loans to energy companies at risk of bankruptcy, according to draft documents seen by Reuters.
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