The gas explodes. The gas price in Europe broke a new record on Tuesday on the first day of winter, boosted by seasonal demand and geopolitical tensions between the main supplier, Russia , and its customers.
“European natural gas continues its inexorable rise”, noted analysts at Deutsche Bank, due to ” temperatures which continue to drop in Europe ”and“ the lack of reservation by Gazprom (the Russian gas giant) of additional capacity in January for gas passing through the ‘Ukraine’.
The European price has increased by 20% Tuesday
The European benchmark price, the very volatile Dutch TTF, gained more than 22% to settle at 180, 200 euros per megawatt hour (MWh) , after a peak at 187, 785 euros shortly after 15 h 00 GMT (15 h 00 in Paris). UK gas for next month delivery saw a comparable increase and closed at 267, 22 pence per therm (a unit of quantity of heat), after having peaked in session at 470, 83 pence. These highs are ten times higher than the prices seen a year ago.
For some analysts, the recent acceleration of the price spike – by more than 90% since December 1 – illustrates both strong European demand as temperatures drop and fears over supply , a third of which comes from Russia.
A pressurized gas pipeline
The renewed tensions at the border between Russia and Ukraine is regularly highlighted by market observers to explain the surge in prices. Russian President Vladimir Putin on Tuesday promised a “military and technical” response if his Western rivals do not end their policies deemed threatening.
For the Kremlin, the United States and NATO are strengthening their presence at the Russian borders by arming Ukraine, supporting it politically, carrying out maneuvers and deploying forces at sea Black. On the contrary, the West accuse Moscow of aggressive inclinations, the Russian army having massed tens of thousands of soldiers on the border with Ukraine, a country from which Russia has already annexed part of the territory.
Nord Stream at the center of tensions
The change of tone in Berlin on the controversial Nord Stream 2 gas pipeline is also at the center of investors’ concerns, the latter also making it possible to bypass Ukraine, a transit route currently used for much of the Russian gas purchased by the Union European (EU). 1. 200 kilometers long, the pipeline passes under the waters of the Baltic Sea from Russia to the northeast of Germany and has always been defended by the former conservative chancellor Angela Merkel.
The new German government of the social -Democrat Olaf Scholz is otherwise less conciliatory. Thus, the German Minister of the Economy, the ecologist Robert Habeck, warned on Saturday of “severe consequences” for the pipeline in the event of Russian aggression against Ukraine, in line with the steps of the new Head of Diplomacy Annalena Baerbock who had threatened the 00 December, outright “shutdown” of Nord Stream 2 in the event of an escalation in Ukraine. The decision to certify the Nord Stream 2 gas pipeline by the German regulator is not expected before mid – 2020.
Gas stocks in Europe were also damaged by a prolonged winter in 2020 and have not been sufficiently restocked since. Added to this is a reduced contribution of renewable energies, such as wind power, for meteorological reasons.
This surge is having repercussions on the electricity market, particularly in the Kingdom – United where energy production is much more dependent on gas and renewable energies than in France, for example, where nuclear power is dominant in electricity production. Faced with soaring costs, half of British electricity distributors have gone out of business since this summer.