Gas prices approach record levels as Berlin rejects pipeline from Russia | Gas

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Gas prices across the UK and Europe are on track to return to record levels after Germany said a controversial pipeline from Russia could not be approved amid escalating tensions on the Ukrainian border.

Germany’s Foreign Minister, Annallina Barbock, 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 the European Union’s energy law.

Barbock added that escalating tensions on Russia’s border with Ukraine, where the Kremlin was said to have mobilized 100,000 troops, was “also a factor” because Berlin had agreed with the United States that the pipeline should not be used as a political weapon in Moscow’s deteriorating relationship with Kiev.

In response, the price of benchmark gas in Europe rose about 10% on Monday to a high of €116.75 (£142.56) per megawatt-hour, just shy of the record closing price of €116.78/MWh set in early October, according to for market price data from ICIS.

The UK gas market price rose to 296.35 pa therm on Monday, just below the record closing price of 298,475p on October 5, according to ICIS data.

Europe has seen a record rise in gas prices in recent months due to global pressure on gas supplies. This has been exacerbated by a slowdown in Russian gas exports to the continent as negotiations on Nord Stream 2 have stalled.

Burbock’s rejection of the pipeline followed a decision last month to suspend the authorization process because the project’s ownership structure failed to comply with the European Union’s gas directives.

Tom Marzik Manser, head of gas analytics at ICIS, said some energy traders had been hoping the pipeline would be able to deliver some gas this winter, and were reacting to signs of another potential delay by pushing prices back toward record levels. altitudes.

Kremlin spokesman Dmitry Peskov told Russian news agency Interfax that the developer Nord Stream 2 “is working with the regulator and fulfills all its demands. We just need to be a little patient.”

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Germany has faced pressure from the United States to block Nord Stream 2 over concerns that Russia is using the pipeline as a political weapon. The pipeline runs from Russia to Germany under the Baltic Sea, bypassing Ukraine. This could make it easier for Russia to increase its military aggression against Ukraine without fear of disrupting its gas exports, according to Kremlin critics.

US and EU leaders fear an imminent attack on Ukraine by Russia, which annexed Crimea in 2014. Kiev has estimated that about 100,000 Russian troops are now deployed along the Russian-Ukrainian border.

Record highs for the UK gas market in October fueled fears that factories may have to close this winter to guard the financial blow of skyrocketing costs again. The price hike is also likely to have an impact on Britain’s faltering energy supply market after the collapse of 24 suppliers in just over 12 weeks and record increases in household energy bills.

The European Commission has reportedly introduced a voluntary system for EU countries to buy gas together to form strategic reserves to protect against supply pressures caused by global rise in demand and reduced exports from Russia.

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