Record Gas Prices Could Hasten Nord Stream 2 Launch, Analysts Say

Record gas prices in Europe could hasten clearance for fuel supplies via Russia’s Nord Stream 2 pipeline to Germany, analysts said on the 14^th September.

Last week Gazprom said it had finished construction of the pipeline and Germany’s energy regulator has said it has four months to complete operating certification after receiving all necessary documents.

The pipeline, which would help Moscow to bypass political foe Ukraine in transiting gas to European markets, doubles its annual gas export capacity via the Baltic Sea to 110 billion cubic metres, about half of Russia’s total gas pipeline exports to the West.

Europe is hungry for the gas, particularly with prices in the region having hit record highs ahead of winter.

Spot prices in the Dutch TTF gas hub exceeded €66 per megawatt hour, or more than US$800 per 1,000 cubic metres, on the 14^th September amid low levels of underground gas storage in Europe.

“The German regulator … will probably try to issue all the necessary permits in the fastest possible way,” said Dmitry Marinchenko, a senior director at Fitch.

Gazprom said in August that Nord Stream 2 could deliver 5.6 billion cubic metres of gas by the end of the year.

The Bundesnetzagentur gas regulator’s website, which was updated on the 13^th September, said that the four-month period to certify Nord Stream 2 started on the 8^th September.

Alexei Grivach of the National Energy Security Fund, a pro-Kremlin think-tank, also said it was possible that German authorities will hasten clearance despite the resistance from the United States and some European countries.

“This will not be easy, taking into account the political environment … but in order to stabilise the market the artificial barriers should be overtaken,” he said.

Nord Stream 2 has drawn criticism from the United States and Ukraine among others, with Washington saying the pipeline will increase Europe’s reliance on Russian energy supplies.

Ukraine reiterated its stance on the 14^th September.

“This threatens the energy independence of many Eastern European countries and undermines Ukraine’s security,” Energy Minister Herman Halushchenko said of the pipeline.

Russia, meanwhile, has said Nord Stream 2 is a commercial project which will strengthen Europe’s energy security.

Source: Pipeline & Gas Journal