The gas price seemed to have found its way down. Well-filled reserves and the energetic realization of a European LNG infrastructure have been depressing gas prices for several weeks. This changed dramatically on Wednesday 27 September when the Danish navy found holes in Nordstream 1 and 2. This news pushed the gas price up by more than 10% in one fell swoop.
The quotation of natural gas on the TTF has shown a downward trend since the peak at the end of August. The decline slowed down in the last week, but still continued. On Monday, September 26, the price on the TTF closed at €173,83 per MWh. That is the lowest price since the end of July. On Tuesday, the gas market was shaken by explosions and subsequent leaks in the Nord Stream 1 and 2 pipeline. The intra-day price briefly rose to €212,41 per MWh. The TTF finally closed yesterday at €186,10 per MWh. Today (Wednesday, September 28) the gas price is further on the rise and at the time of writing the TTF stands at €200,50 per MWh.
On Monday evening, the operator discovered a sudden pressure drop in both pipelines of the Nordstream 1. A leak was also discovered in the Nordstream 2 - which has not yet been put into use. The spill is located in the Baltic Sea off the Danish island of Bornholm. Pipeline operator Nord Stream AG speaks of 'unprecedented damage to three of the four pipelines'.
It is very likely that the pipelines have been sabotaged. Prior to the spill, heavy submarine explosions were observed by both Danish and Swedish authorities. The investigation into the leak is ongoing, and people in the West are very cautious about identifying anyone to blame. Several analysts think that Russia most likely has something to do with this. However, the Kremlin denies all accusations and according to spokesman Peskov we must wait for the results of the ongoing investigation. He emphasizes that Russia has now lost an important route for gas exports to the EU.
The leak in the Nord Stream comes at a remarkable time. The Baltic Pipe, a new gas pipeline between Norway and Poland, would be symbolically put into use on Tuesday. This should make Poland less dependent on Russian gas.
Limited effect
Although the gas market clearly reacted to the explosion in the Nord Stream, the price on the TTF remains well below the peak at the end of August. This is partly because no more gas has been transported to the EU from Russia in recent weeks. What also helps is that the European member states have not been idle in recent months and have taken measures to reduce their dependence on Russian gas. For example, there has been a rush to fill the gas storage facilities. The filling rate in the EU now stands at an average of 87,7%. The Dutch filling rate is higher than this European average and approaches 90%. Germany's gas reserves are in even better shape and are 91,3% full. The gas reserves of Poland, France and Denmark are the most full, with a degree of 95%. There has also been a full focus on LNG. A floating LNG terminal was put into use in the Netherlands earlier this month. Germany - the largest gas user in the EU - is also conducting negotiations about the supply of additional LNG and has LNG terminals under construction that are already at an advanced stage.