Vogon Today

Selected News from the Galaxy

Economic Scenarios

Natural Gas: Nord Stream 2 homologation block. We will be in the cold or in our underwear

European natural gas prices rose up to 12% on Tuesday after the German energy regulator unexpectedly suspended a key step in the approval process for the Nord Stream 2 pipeline . According to Bloomberg , the German Federal Network Agency has stopped the Nord Stream certification process required to pump natgas directly from Russia to Germany. Certification was initially expected to be completed in early 2022, but it now seems unlikely.

The move comes when Nord Stream 2 AG, the pipeline operator, decided to set up a German subsidiary in an effort to meet European Union regulations that require gas producers to be legally segregated from the entities transporting the fuel. The Russian Gazprom PJSC, which produces and sells natural gas, owns Nord Stream 2.

The German regulator said the entity "must therefore meet the requirements of the Energy Industry Act for an independent transport network operator." He added, "the certification process remains suspended".

The announcement raised European benchmark gas prices as traders fear the decision means Europe won't have much gas needed to facilitate limited supplies this winter. Dutch gas for the month before, the European benchmark, rose up to 12%, exceeding 88 euros per megawatt hour.

"If it is believed that flows can only start after certification is complete, this means that flows through Nord Stream 2 will suffer further delays, with negative implications for the European gas balance during the winter," said Katja Yafimava. senior researcher at the University of Oxford. Institute for Energy Studies.

The moment of suspension comes at the worst possible time. Europe is facing a massive energy crisis as natgas stocks are the lowest in a decade just as Europe faces its first cold winter blast. Far below average temperatures continue to plague parts of the continent, as shown by the following chart of degree days of warming in northwestern Europe.

Meanwhile, natgas storage levels in Europe are the lowest since 2013.

The suspension deprives Europe of new supplies of up to 55 billion cubic meters of gas per year transited in an underwater gas pipeline across the Baltic Sea from Gazprom's plants in Russia to Germany and then distributed throughout Europe, effectively bypassing the pipelines that pass through Ukraine.

James Waddell of Energy Aspects, a consulting firm, told FT that "any remaining hope that this pipeline would be available for the winter is now completely gone now."

“It seems more and more that it may not start until the second half of next year.

“The lack of gas in storage and the lack of Russian supplies essentially mean that we need to cut industrial demand in order to preserve crucial gas supplies for electricity and heat grids. Europe must heavily reduce industrial gas demand in a way we haven't seen in decades, ”Waddell said.

Meanwhile, perhaps sensing that Europe would complicate things, Goldman Sachs' Samantha Dart wrote on Monday that "today's December Yamal pipeline capacity auction indicates no reservations from Gazprom, against our 45 million cubic meters. / day expected ". And while "the booking volumes do not guarantee the flow, as illustrated by the Yamal flows for October and so far in November respectively at 14 mmc / g and 10 mmc / d, against bookings at just over 30 mmc / d for both months" he added. that the lack of reservations "keeps the uncertainty of the offer high until the end of the year".

Europe is heading towards an energy disaster, with insufficient supplies and stocks that fail to build up, leading to an increasingly cold winter. We will have to expect very high peaks of the spot price, also because Putin had made it clear that without homologation of Nord Stream 2 he would have had a much less benevolent attitude. The Germans, on the other hand, gave him a dry slap, and risk paying the costs. Together with us …


Telegram
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.

⇒ Register now


Minds

The article Natural Gas: Nord Stream 2 homologation block. We will be in the cold or in our underwear comes from ScenariEconomici.it .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gas-naturale-blocco-omologazione-nord-stream-2-saremo-al-freddo-o-in-mutande/ on Tue, 16 Nov 2021 16:00:56 +0000.