A major Russian pipeline shipping natural gas to Europe is expected to go offline for maintenance come the end of August, putting additional pressure on Germany’s economy as the country struggles to fill its reserves ahead of the winter months.
The price of natural gas futures for September on the TTF hub jumped 10% to $385.5 per megawatt hour, or $2,905 per thousand cubic meters on Monday, after Gazprom announced it would shut down the Nord Stream 1 pipeline starting on August 31 for three days of maintenance on a key compressor station. “Once the work is completed and there are no technical malfunctions of the unit, gas flows will be restored to 33 million cubic meters per day,” the state-backed gas giant said in a statement last week, adding that the scheduled work will be conducted alongside Siemens Energy.
The latest planned shutdown comes after Gazprom finally restored gas flows to 20% capacity following last month’s maintenance on the pipeline linking Germany and western Russia. Although Moscow assured the temporary shut-offs are related to technical problems, the European Union attests Gazprom’s moves as politically motivated amid the conflict in Ukraine. “We are monitoring the situation in close cooperation with the Federal Network Agency,” said Germany’s Economy Ministry. “Gas flows through Nord Stream 1 are currently unchanged at 20 per cent.”
The looming shutdown sends fears that Russia may fully shutoff Europe’s natural gas supply in an effort to gain political leverage during a vulnerable time for the EU as it attempts to fill its storage facilities. Germany has until the beginning of November to fill its reserves to 95% capacity; as of July, the country’s gas storages stood at only 66.8%, according to data from the Federal Network Agency. With flows from Russia capped at 20% capacity, though, the agency warns that such a rate would make it “hardly achievable without additional measures” for Germany to fill its reserves to adequate capacity.
Information for this briefing was found via Gazprom, the Federal Network Agency, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.