"Delaying deadlines": why gas prices in Europe have risen sharply after the suspension of certification for Nord Stream 2

On Wednesday, November 17, gas prices in Europe renewed their monthly high.

During the auction, the cost of fuel at the TTF hub in the Netherlands rose by more than 8% - to € 101.8 per MWh, or $ 1186 per 1,000 cubic meters.

The last time a similar indicator could be observed on October 18.

This is evidenced by the data of the London stock exchange ICE.

Note that gas prices in Europe began to rise rapidly the day before.

According to experts, the quotes were influenced by the decision of the Federal Republic of Germany on Nord Stream 2.

So, on November 16, the German Federal Network Agency (BNA) announced the suspension of certification of Nord Stream 2 AG as an independent pipeline operator.

“Prices began to rise sharply as investors fear a delay in the start of natural gas supplies to Europe via Nord Stream 2.

The heating season is already beginning in European countries, and fuel reserves in local storage facilities remain significantly below the norm for the last five years.

In these conditions, market players are afraid that after the BNA decision, the gas deficit in Europe will remain longer than expected, "Anton Bykov, a senior analyst at Esperio, explained to RT.

As the Federal Grid Agency clarified, the renewal of the certification procedure will be possible only after the reorganization of the legal form of Nord Stream 2 AG.

Thus, the operator must set up a subsidiary in Germany for the German part of the pipeline.

"The certification procedure will be suspended until the main assets and human resources are transferred to the subsidiary, and until Bundesnetzagentur (Federal Network Agency. -

) can verify the completeness of the documentation re-submitted by the subsidiary as a new applicant." said in a message from the BNA.

It is noteworthy that Nord Stream 2 AG has already decided to establish a subsidiary in Germany to comply with all rules and regulations.

TASS writes about this with reference to the press service of the company.

The Kremlin also commented on the situation with the suspension of certification.

As the press secretary of the president Dmitry Peskov said on Wednesday, the process remains "rather complicated", but the operator company fulfills all the necessary requirements of the German regulator.

At the same time, Peskov stressed that the Russian authorities did not see a political background in the BNA decision.

“In this case, there really are certain protocols, norms of European legislation in this regard.

And the operator company is ready to fulfill all the requirements of the current legislation in order to launch this important project for all as soon as possible, ”added the press secretary of the head of state.

Previously, it was assumed that Nord Stream 2 would be certified by January 8, 2022.

According to Anton Bykov, taking into account the current changes, the process runs the risk of dragging on for another two to three weeks.

However, the onset of cold weather in Europe can speed up the procedure, says Alexey Korenev, an analyst at FG Finam.

“There are no basic complaints about the project.

SP-2 was built as it was originally designed, it suits all parties in terms of initial and final parameters.

It would seem that nothing should interfere with certification, but we see that nit-picking of documents has begun.

However, if the winter turns out to be colder than anticipated, the process will go much faster.

The relevant authorities will be ready to sign immediately on the last page, if only the gas goes faster, "Korenev suggested in a conversation with RT.

Sources of the crisis

As a reminder, since the beginning of 2021, gas prices in Europe have increased more than fivefold, and in early October, the cost of fuel briefly approached the $ 2,000 mark per 1,000 cubic meters - for the first time over the entire observation period.

The main reason for this dynamics was the acute shortage of gas in European reserves.

Today, the gas storage facilities of the European Union and Great Britain are approximately 74% filled in total, although a year ago this value exceeded 93%.

The smallest fuel reserves today are in Slovakia (68.8%), Germany (68.7%), Sweden (66.4%), the Netherlands (60.8%) and Austria (52.4%).

This is evidenced by the data of the Association for Gas Infrastructure of Europe (GIE).

• © Nord Stream 2 / Nikolai Ryutin

“With a relatively mild winter, the current reserves in Europe will be enough, but in the event of a sharp drop in temperature, the countries of the region will have a hard time.

The existing energy supply system in the EU has no margin of safety.

Local authorities relied on green energy, on wind turbines in the North Sea, but those turned out to be inoperative this year, ”said Alexey Korenev.

At the same time, according to the analyst, the main problem of the European energy market was the change in the pricing system.

As the specialist recalled, Russia and Gazprom have always advocated that fuel supplies be based on long-term contracts with a fixed cost of raw materials.

At the same time, the European Commission promoted the transition specifically to exchange gas trading.

“The stock exchange is a very peculiar thing.

This is a huge number of players who have their own opinion, are influenced by rumors and the media.

Therefore, exchange prices are very volatile, and if now the FRG cannot agree on the certification of the SP-2 in any way, quotations can easily rise above $ 2 thousand per thousand cubic meters.

For that part of Europe that buys gas on the basis of short-term contracts, it will be a disaster, ”Korenev added.

Looking for the culprit

It is curious that the EU itself regularly tries to blame Russia for the current energy crisis.

In September, a number of MPs even called on the European Commission to launch an investigation into Gazprom, which allegedly manipulates the market and puts pressure on Europe.

In turn, President Vladimir Putin called such statements "politically motivated chatter."

According to him, Moscow, even during the most difficult periods of the Cold War, fully fulfilled its contractual obligations and supplied gas to Europe.

Moreover, as the head of state emphasized, if necessary, Russia is ready to increase gas supplies.

To this end, at the end of October, the Russian leader instructed Gazprom to ensure the pumping of energy resources into the company's underground storage facilities located in Europe.

“If we are asked to increase (gas supplies. -

) more, we are ready to increase more.

We increase as much as our partners ask us.

There is not a single refusal.

Not a single one, "Putin said at the plenary session of the Russian Energy Week forum in October.

• RIA News

• © Sergey Guneev

According to Anton Bykov, in the near future gas prices in Europe may rise to $ 1.2-1.3 thousand per 1,000 cubic meters, and at the beginning of 2022 they will be able to renew their historical highs again. As the specialist notes, the current state of affairs has already led to an increase in consumer prices in the EU, and in the future it may seriously hit the incomes of Europeans and the economy of the region as a whole. Alexey Korenev adheres to a similar point of view.

“High gas prices, even with constant pumping rates for Europe, is an increase in costs, an increase in prices for any energy, and energy lies in the cost of any product and service.

This is fuel, heating, and the work of enterprises.

In addition, Europe has to abandon the green agenda.

Already now, the countries of the region are forced to reactivate the coal mines with which they had time to say goodbye, and to heat the stations with coal, ”the expert concluded.