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5 Sep, 2022 10:28

European gas prices soar

The complete shutdown of a key Russian pipeline sends prices surging by almost a third
European gas prices soar

Natural gas spot prices in Europe jumped 30% on Monday after supplies via Russia’s Nord Stream 1 pipeline failed to resume due to sanctions-related maintenance issues.

October gas futures on the TTF hub in the Netherlands rose to nearly $2,900 per thousand cubic meters, up from $2,213 at Friday’s close.

Russian energy giant Gazprom said that Nord Stream 1, a key gas route from Russia to the EU, would remain shut indefinitely after a scheduled three-day maintenance break that began on August 31 uncovered problems. According to the company, an oil leak was found in the main gas turbine during a joint inspection with Siemens Energy at the compressor station near St. Petersburg.

Expectations for a restart of supplies led EU prices to fall by around 40% last week. The cost of gas has surged nearly 400% in the bloc over the past year as the energy crisis across the continent has deepened.

According to Gazprom, the latest technical issues arose due to “gross violations” committed during maintenance, which is the responsibility of Siemens Energy. The German firm responded by saying that the leak cannot be considered a technical reason for a complete halt of gas supplies via the pipeline.

Last week, Moscow said only sanctions are preventing Nord Stream 1 from working at full capacity. Gazprom CEO Alexey Miller also warned that the restrictions could obstruct Siemens Energy from carrying out regular maintenance on the pipeline’s equipment. The statements followed repeated EU accusations that Moscow was weaponizing energy supplies.

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