Europeans are about to have a very cold, and expensive winter ahead. Germany’s energy regulator has “temporarily suspended” the certification process of the Nord Stream 2 pipeline, creating a major obstacle in the bloc’s energy supply, and sending natural gas prices soaring to historic highs once again.
European natural gas prices jumped by as much as 12% Tuesday morning, after Bloomberg reported that Germany’s Federal Network Agency suspended the certification process of the Nord Stream 2 pipeline, which was preparing to pump much-needed natural gas supplies from Russia to Germany. The previous timeline for the completion of the approval process was set for early 2022, but now it appears that Europeans’ pocketbooks will instead have a much tougher winter ahead.
The German regulator halted the project’s approval process because the operator of the pipeline, Nord Stream 2 AG, has yet to finalize itself as a German subsidiary. Russia’s Gazprom, the owner of Nord Stream 2 AG, must abide by European Union regulations which demand that gas producers are not legally connected to operators that transport the commodity.
Germany’s decision also comes at a terrible time for Europe, as it faces a worsening energy shortage with natural gas stockpiles sitting at a 10-year low. Much of the continent has been grappling with unseasonably cold temperatures already, further adding to the surging inflation and supply chain disruption landscape that is eroding away at what is left of Europeans’ purchasing power.
As much as the European Union wants to have the upper hand in the door-slamming-in-face theatrics and become independent of Russia’s energy supplies, the continent perilously needs Gazprom to make it through the cold, inflationary winter.
Information for this briefing was found via Bloomberg. 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.