Gas prices near record highs as Berlin rejects pipeline from Russia
Gas prices across the UK and Europe are on course to return to record highs after
Germany said a controversial pipeline from Russia could not be approved amid deepening tensions on the Ukrainian border.
The German foreign minister, Annalena Baerbock, said the Nord Stream 2 pipeline could not be given the green light in its current form because it did not meet the requirements of EU energy law.
Baerbock added that the escalating tensions on Russia’s border with Ukraine,
where the Kremlin has reportedly amassed 100,000 troops, was “also a factor” because Berlin had agreed with the US that the pipeline should not be used as a political weapon in Moscow’s deteriorating relationship with Kyiv.
In response, Europe’s benchmark gas price climbed by around 10% on Monday to a high of €116.75 (£142.56) per megawatt hour (MWh), just shy of the record closing price of €116.78/MWh set in early October, according to market price data from ICIS.
The UK’s gas market price climbed to 296.35p a therm on Monday, just below the record closing price of 298.475p on 5 October, according to ICIS data.
Europe has experienced record high gas prices in recent months owing to a global squeeze on gas supplies. This has been compounded by a slowdown of Russian gas exports to the continent as negotiations over Nord Stream 2 have stalled.
Baerbock’s rejection of the pipeline followed a decision last month
to suspend the permission process because the project’s ownership structure failed to comply with the EU’s gas directive.
Tom Marzec-Manser, the head of gas analytics at ICIS, said some energy traders had held out hope that the pipeline would be able to deliver some gas this winter, and had reacted to signs of a further potential delay by driving prices back towards record highs.
Dmitry Peskov, the Kremlin spokesperson, told the Russian news agency Interfax the Nord Stream 2 development company was “working with the regulator and fulfilling all its demands. We just need to be a bit more patient.”
Germany has faced pressure from the US to block Nord Stream 2 over concerns that Russia could use the pipeline as a political weapon. The pipeline runs from Russia to Germany beneath the Baltic Sea, bypassing
Ukraine. This could make it easier for Russia to increase its military aggression towards Ukraine without fear of disruption to its gas exports, according to critics of the Kremlin.
US and EU leaders
fear a looming attack on Ukraine by Russia, which annexed Crimea in 2014. Kyiv has estimated that about 100,000 Russian troops are now deployed along the Russia-Ukraine border.
October’s record UK gas market highs ignited fears that
factories would need to shut this winter to guard agains the financial blow of rocketing costs. The surge in prices is also likely to take its toll on
Britain’s struggling energy supply market after the collapse of 24 suppliers in a little over 12 weeks and record hikes in home energy bills.
The European Commission has reportedly put forward a voluntary system for EU countries to buy gas together to form strategic reserves to safeguard against a supply squeeze caused by a global surge in demand and lower exports from Russia.
Germany says escalating tensions over Ukraine are one factor in Nord Stream 2 not getting green light
www.theguardian.com
