The price of gas in Europe broke a new record Tuesday on the first day of winter, boosted by seasonal demand and geopolitical tensions between the main supplier, Russia, and its client countries.
“European natural gas continues its inexorable rise”, say analysts at Deutsche Bank, due to “temperatures which continue to drop in Europe” and “the lack of reservations by Gazprom (the Russian gas giant , Editor’s note) additional capacity in January for gas passing through Ukraine “.
The European benchmark price, the Dutch TTF, rose to 12 H 00 GMT (13 H in Paris) up close from 20% to 175, 00 euros per megawatt hour (MWh), breaking its previous record of 6 October, when that of British gas for delivery next month peaked at 435, 00 pence per therm (a unit of heat), following an increase from the previous day’s close.
These spot price points are close to eight times higher than at the start of the year.
For some analysts, this recent surge in prices – the Dutch TTF was trading below 100 euros per MWh and British gas was not trading more of 250 pence per therm in early December – illustrates both strong demand as temperatures drop and fears over supply, a third of which comes from Russia.
– A gas pipeline under pressure –
The renewed tensions at the border between Russia and Ukraine are regularly highlighted by market observers to explain the outbreak prices.
Westerners claim that Moscow is massing soldiers on the Ukrainian border with a view to a possible military operation, accusations rejected by Russia, which claims to be on the contrary under the threat of the NATO, which is arming Ukraine and increasing the deployment of air and maritime assets in the Black Sea region.
The change of tone in Berlin on the controversial Nord Stream 2 e gas pipeline is also at the center of investors’ concerns, since the latter would make it possible to bypass Ukraine, a transit route currently used for a large part of Russian gas purchased by the European Union (EU).
1. 200 kilometers long, this gas pipeline which passes under the waters of the Baltic, from Russia to northeastern Germany, has always been defended by the former Chancellor conservative Angela Merkel but the new German government of Social Democrat Olaf Scholz is otherwise less conciliatory.
The German Minister of the Economy, the ecologist Robert Habeck, warned on Saturday against ” severe consequences “for the pipeline in the event of Russian aggression against Ukraine.
The new head of Diplomacy Annalena Baerbock had threatened the 12 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 and is not expected before mid – 2022.
– War of nerves –
In this context, each new diplomatic nip leads to a buying wave on the gas market.
The latest: the expulsion on Monday of two German diplomats in response to a similar measure taken last week by Berlin which accuses Moscow of ” having ordered the assassination of a Chechen opponent in Germany in 2019.
Gas stocks in Europe were also damaged by a prolonged winter in 2020 and have not been sufficiently restocked since.
To this is added a reduced contribution of renewable energies, such as wind power, for meteorological reasons.
This surge is having repercussions on the fuel market. ‘electricity, particularly in the United Kingdom where energy production is much more dependent on gas and renewable energies than in France, for example, where nuclear power dominates in electricity generation.
Faced with soaring costs, half of British electricity distributors have gone out of business since this summer.
Governments have found themselves under pressure in recent months to try to minimize the surges expected electricity bills for consumers already affected by the economic consequences of the pandemic. France has thus implemented energy checks.