Tension on the European gas market is rising again. Supply problems disrupt the build-up of stocks. And that causes additional unrest and an already very tense gas market. As a result, the price of gas has risen to its highest level in months.
Gas quotations on the TTF are on the rise again. On Friday, June 17, the price seemed to stabilize for a while and the TTF quotation closed at €117,74 per MWh. This week the upward trend has started again. On Tuesday, June 21, the TTF closed at €125,56 per MWh. That is the highest price since March. On Wednesday afternoon, the quotation rose even further and stood at €126,51 per MWh.
Problems with the supply of gas from Russia and an explosion in one American LNG factory cause unrest in the market. The state gas company Gazprom has significantly cut the amount of gas pumped to the EU. The supply of gas to the major European buyers Germany, France and Italy has been severely curtailed. This puts the stock build-up for the coming winter at risk. The aim is for the gas storage facilities to be filled to at least 80% before the start of winter. The European Commission accuses Russia of using energy as a weapon. However, the Kremlin insists that technical problems are playing a role in the lower deliveries.
Technology or politics
A Nord Stream 1 gas turbine was shipped to Canada for maintenance before the outbreak of war. Siemens, the supplier of the turbine and responsible for the maintenance work, announced last week that the turbine can no longer be returned to Russia due to Western sanctions. Jonathan Wilkinson, Canada's minister of natural resources, told Bloomberg on Tuesday that he was working with Germany on a solution to the impasse. "We want to respect the sanctions, because they have been imposed for a reason. The purpose of the sanctions has never been to cause problems for Germany, a good friend and ally. We are aware of the problem that has arisen and we are working with Germany on a solution." There are several options on the table according to Wilkinson.
There are open doubts (including by German Chancellor Scholz) whether the smaller exports of Russian gas are actually caused by technical problems. According to them, the reduction in gas deliveries is politically motivated and the technical problems are only used as an excuse. Countries such as Germany, Italy, Austria, Denmark and the Netherlands have activated the first phase of a three-stage emergency plan due to gas supply problems. Various experts warn that control now lies mainly with the Member States. The European energy grid is interconnected and problems in one Member State can lead to a chain reaction. Good coordination between the Member States is therefore essential, experts warn.