Renewed fears of a prolonged halt in gas supplies via a major pipeline have pushed prices of natural gas in Europe soaring, even as the economy continues to struggle.
Benchmark futures rallied by nearly 13% today after rising to a record high on Friday. This move materialized as the famous Nord Stream pipeline, which carries gas to Europe, will be sealed off for Maintenance for three days, starting from August 31. Further, experts are worried that supply may not begin immediately, as seen during previously scheduled maintenance.
Europe has complained about dwindling gas supply around the Nord Stream route for many weeks, especially with supply coming in at a slow pace the last time the pipeline was closed off for maintenance.
While Europe continues to suffer a severe energy crisis, Germany is reiterating its call for the region to conserve energy as it warned that the Kremlin might further cut the gas supply to the EU. According to German Economic Minister Robbert Habeck, Europe has a critical winter to prepare for, adding that conserving energy now will help it manage gas demand which is expected to peak in winter.
Dwindling gas supply to Europe and what it means
As the region continues to battle energy crises, European authorities have continued to issue warnings that the region could suffer significantly should the Kremlin decide to pull the plug on gas supply to Europe as retaliation for sanctions imposed by the West.
Germany, for many months now, has been exploring alternative options to replace Russian gas. Reports suggest that the country is considering extending the life of nuclear plants, representing a significant detour from the country’s energy politics.
Speaking on proposed maintenance scheduled to start on August 31, Gazprom stated that a ton of work needs to be done on the only functioning turbine that pumps gas to the pipeline. It would be recalled that the channel has only been working at 20% capacity since it was opened after the last maintenance.
Despite an explanation from Gazprom, European politicians believe that the dwindling supply via the Nord Stream pipeline is politically motivated.