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Germany's energy regulator suspended the process on Tuesday for
bringing the Nord Stream 2 pipeline online, dimming hopes that
it will provide any significant gas supplies in the coming
months and sending jitters through energy markets.
The price of gas next month in the Netherlands, which is
considered to be a benchmark for Europe, jumped almost 8% on
Wednesday to hit 101.30 euros per megawatt-hour (MWh), its
highest since Oct. 18.
The price of gas at the beginning of next year also rose, with
the market not expecting any major flows through Nord Stream 2
until late in the coming winter heating season, by the time
demand may have already peaked.
"The timeline for the start of the pipe now appears longer than
what we initially expected," analysts at Goldman Sachs wrote in
a note, adding that they now expected it to be up and running
only in February next year.
The Dutch contract for gas in January leapt 7.8% to 101.61 euros
per MWh on Wednesday while the British wholesale gas price
contract for the first three months of 2022 surged almost 12% to
2.45 pounds per therm.
European governments are scrambling to soften the blow for
consumers and businesses alike with emergency measures such as
price caps and subsidies. One of the world's biggest energy
traders, Trafigura, also warned on Tuesday that Europe could
face power outages this winter due to low supplies.
FUELING INFLATION
Higher energy prices in Europe and around the world are already
feeding through to inflation rates, which may in turn push
policymakers to raise interest rates sooner than expected.
Data published on Wednesday showed inflation rates in both the
European Union and Britain jumped above 4% in October, more than
double central bank targets, with gas prices paid by British
consumers, for example, sky-rocketing 28%.
Gas prices in Europe, which gets a third of its gas from Russia,
were also buoyed by a decline in exports this week from Norway,
another key energy supplier to Britain and the European Union,
due to maintenance work on its gas infrastructure.
Germany's energy regulator said it had halted the certification
of Nord Stream 2 because the Swiss-based consortium behind the
pipeline needed to form a German subsidiary under German law to
secure an operating licence.
In the first comments since news of the delay broke, the Kremlin
said the certification was a "complicated process" and that it
did not see politics behind the decision. Spokesperson Dmitry
Peskov said the consortium deals with requests from the German
regulator in a timely fashion and Russia must be patient.
Russian gas flows through the Yamal-Europe pipeline to Germany
were steady on Wednesday morning and above levels at the
weekend, data from German network operator Gascade showed.
The pipeline, which runs through Belarus - crippled by the
migrant crisis and a stand-off with the West - is one of the
major existing routes for Russian gas exports to Europe.
Adding to concerns about possible interruptions of gas exports
from Russia, Belarussian leader Alexander Lukashenko has warned
that he may shut the pipeline in a dispute with the EU.
Flows via the Yamal-Europe pipeline into Germany at the Mallnow
metering point on the Polish border were running at an hourly
volume of over 12,500,000 kilowatt-hours (kWh) on Wednesday,
roughly the same as Tuesday, the data showed.
(Reporting by Vladimir Soldatkin, Robert Muller and Susanna
Twidale; Editing by David Clarke)
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