Europe's fears of low gas supply have returned after Russia's state-owned energy giant Gazprom announced that it would once again shut down the region's single biggest piece of gas infrastructure for three days for maintenance starting at the end of the month.
The unscheduled maintenance of the Nord Stream 1 Pipeline, which runs from Russia to Germany via the Baltic Sea, has deepened a gas dispute between Russia and the European Union. It has also exacerbated both the risk of a recession and a winter shortage of gas supply to households.
Nord Stream 1 Pipeline Maintenance
On Monday, the front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, jumped 19% to reach $291.9 per megawatt hour. The contract closed on Friday at a record high of $243.32., registering its fifth consecutive weekly gain.
On Friday, Gazprom said that the shutdown of the Nord Stream 1 Pipeline was because its only remaining compressor required servicing. Gas flows via the pipeline will be suspended for the three-day period from Aug. 31 to Sept. 2, as per CNBC.
The company said that gas transmission would resume at a rate of 33 million cubic meters per day when the maintenance work is completed "provided that no malfunctions are identified." The announcement of the temporary shutdown comes as European governments scramble to fill underground storage facilities with natural gas supplies.
Authorities have attempted to have enough fuel to keep homes in the region warm during the coming winter months. On the other hand, Russia has drastically reduced natural gas supplies to Europe in recent weeks.
According to CNN, the latest shutdown comes after a 10-day scheduled annual maintenance that took place in July. Now, the announcement raises fears over whether Russia would resume supplies, which have decreased since mid-June.
Reduced Gas Supply
Germany was already forced to give Uniper, its largest importer of Russian gas and the highest-profile corporate victim of Europe's energy crisis so far, a $15.1 billion bailout after Moscow drastically reduced gas flows.
On the other hand, the broader German economic impact was highlighted in producer price data on Friday which in July showed the highest ever increases, both year-on-year and month-on-month, as energy costs skyrocketed.
The temporary shutdown of the Nord Stream 1 Pipeline comes as it had already been running at just a fifth of its capacity. Germany has made targeted efforts to fill up its storage facilities to prepare for the winter season, with levels standing at 78.19% as of Aug. 17.
European officials have accused Moscow of weaponizing energy in relation to sanctions that were placed on Russia over its invasion of Ukraine. Gas supply interruptions and cuts have also forced European nations to seek alternative energy resources and mobilize rationing plans ahead of the cold season.
Russia's reduction of gas deliveries to Europe has roiled global energy markets, triggering a worldwide race to secure enough supplies. The United States has already replaced Russia as Europe's top gas supplier and buyers in Asia have stepped up gas purchases, anticipating massive demand from Europe, Business Insider reported.
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