'Sigh of relief' for households as gas flows from Russia again but the threat to supply remains
File Rate And At Maintenance Is Been The Into Germany Shutdown Its Gas Had 10 Day Before Shipments, Picture Flowing Russia Has Restarted It Same
European wholesale market gas prices fell after Russia restarted shipments through the Nord Stream 1 pipeline, its biggest link to Europe, following 10 days of maintenance.
Russian gas was flowing to Germany at about 40% of the pipeline’s capacity on Thursday, roughly the same as before the annual works began. Orders indicate the link will operate at the same level for at least a day.
The resumption of flows eases fears that Russia will halt shipments and provides some relief for Europe as it races to store the fuel before the winter. EU policy makers have been preparing for the worst with a plan to curb gas consumption by 15%. Budget Commissioner Johannes Hahn even said he didn’t expect the pipeline to come back.
“The resumption this morning of flows along Nord Stream is likely to lead to a collective sigh of relief from not just the European gas market, but from the wider economy,” said Tom Marzec-Manser, the head of gas analytics at ICIS in London.
Physical flows arriving in Germany are a bearish indicator for gas, even if the pipeline is operating at only a fraction of its total capacity, he said. Traders have been looking for clarity on plans to restart the pipeline for days.
Russian president Vladimir Putin earlier this week warned that Nord Stream 1 could return from maintenance at lower rates unless a spat over a key piece of equipment is resolved.
One of the pipeline’s turbines got stuck in Canada by western sanctions on Russia for its invasion of Ukraine, but has since been released.
Mr Putin said delays in receiving the turbine could lead volumes to be cut to only 20% of capacity by the end of this month, when another part is due for maintenance.
Flows via the pipeline were reduced to around 40% of capacity on June 16 until the annual works started.
Europe needs to stay vigilant despite returning flows via Nord Stream, said Simone Tagliapietra, a senior fellow at Brussels-based think tank Bruegel.
For Moscow, keeping flows low may be a better strategy than cutting them off altogether, he said:
“An interruption is likely to happen in the winter and each cubic meter of gas saved now, makes Europe more resilient in the next months.”
In a call with reporters, Kremlin spokesman Dmitry Peskov rejected accusations that Russia uses gas to pressure or blackmail Europe.
• Bloomberg