European Gas Price Drops Sharply After Short-Lived Advance

The European gas price fell sharply on Tuesday after the sharp rise the day before. Gas prices skyrocketed on Monday in response to the decision by the Russian state gas group Gazprom to suspend gas supplies to Germany via the important Nord Stream 1 pipeline.

 

Russia still sends gas to Europe via a route through Ukraine.

The price for a megawatt hour of gas was almost 11 percent lower on Tuesday morning at 219 euros. In mid-2021, the gas price was still around 20 euros per megawatt hour. On Monday, the already high gas price shot up by 18 percent due to concerns that the energy supply in Europe will be at risk this winter. Last week, the European gas price fell by almost 40 percent, hoping that Russia would resume gas deliveries via Nord Stream 1 and reports of well-stocked European winter stocks.

Gazprom has indefinitely shut down the gas supply to Germany due to maintenance. According to the state-owned company, deliveries via the Nord Stream 1 cannot be resumed until Germany’s Siemens Energy repairs the faulty equipment.

This weekend, Siemens Energy said it had not been ordered to carry out repairs. The German company also said that the oil leak reported by Gazprom at the only working turbine usually does not affect the operation of the device and could be closed on site.

European leaders see turning off the Russian gas tap primarily as a political means of pressure. The European Union has imposed numerous sanctions against Russia over the war in Ukraine, which would be retaliation. The Kremlin also said that the gas supply would not return to old levels until sanctions against the country are lifted.

European countries are taking measures to help households and companies with the sharply rising inflation and energy prices. For example, Germany is allocating more than 65 billion euros for extra support. The country is also keeping two nuclear reactors open for longer. These will serve as a reserve in case of energy shortages. In addition, the new British Prime Minister Liz Truss wants to allocate up to 130 billion pounds (151 billion euros) to protect households from significantly more expensive energy bills.

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