European Gas Steadies as Gazprom Signals More Turbine Delays

Print 🖨

Natural gas prices in Europe reversed losses after Russia signaled that more equipment for the Nord Stream pipeline could be caught up in sanctions-related delays.

Three compressor turbines in Russia are in need of repairs and may be subject to the same sanctions risks as a unit that’s currently stranded in Germany following maintenance, state-producer Gazprom PJSC said in a statement.

The key pipeline from Russia to Germany has been operating at about 20% of capacity since last week, after Russia cited maintenance issues with the turbines that help pump gas into the link. Gazprom has cut gas supplies to other European Union nations this year amid heightened tensions over Russia’s war in Ukraine.

Meanwhile, the EU has been rushing to stockpile fuel ahead of winter as it seeks to prevent the energy crisis from causing further economic damage. Soaring inflation is threatening to tip some of the bloc’s largest economies into recession. In addition, the Rhine River is so low that commodity transport on the vital waterway is at risk, compounding the supply crunch.

European gas prices remain high as Russia limits supplies

Dutch front-month gas contract, the European benchmark, settled little changed at 199.25 euros per megawatt-hour. Prices remain near their highest levels since early March, in the first weeks of Russia’s war in Ukraine.

The UK equivalent climbed 2.4%, with a number of gas facilities in the country undergoing seasonal maintenance.

Turbine Dispute

One of Nord Stream’s turbines is still in Germany, following repairs in Canada, amid a stand-off over its return to Russia. The Kremlin said Thursday that Gazprom would like to get the unit back, but the company needs documents to show that it isn’t subject to international sanctions.

German Chancellor Olaf Scholz has laid the blame on Moscow for the turbine’s return, saying there are no hurdles on Germany’s side.

ROO.AI Oil and Gas Field Service Software

“The Russian government decides what the export level is,” said Thierry Bros, a professor at the Paris Institute of Political Studies. “The rest is just a show for prime time TV.”

Read: Don’t Expect Nord Stream Gas Revival as Turbine Blaming Drags On

Elsewhere, the first shipment orders for Russian gas transit through Ukraine on Friday are below levels seen over the past two months, preliminary data published by Ukraine’s grid show.

Separately, Uniper SE warned it may have to cut output at two key coal-fired power plants in Germany as fuel supplies are limited because of low water levels on the Rhine. Hotter river temperatures are also affecting nuclear plants in France.

LNG Imports

Futures slipped earlier Thursday amid signs that Europe might see more liquefied natural gas imports from the US.

The Freeport LNG export terminal in Texas, shut this year after a blast, reached an agreement with regulators to restart in early October at almost full capacity. While the facility had already indicated that it planned to resume operations by then, traders expected a more gradual return.

The build-up of European stockpiles, coupled with falling consumption by industry, had helped to limit the rally in gas prices in recent days.

Demand Destruction | Europe cuts gas consumption as costs are soaring

Extra gas from the US “should help ease some of the tightness in the spot market we have seen recently, as well as put pressure potentially on Gazprom to reassess the compressor issue at Nord Stream,” said Nick Campbell, a director at consultant Inspired Plc. Higher LNG flows should impact prices and therefore affect Russia’s gas revenues, he said.