On Thursday, June 16, gas prices in Europe hit a three-month high.

During the auction, the cost of fuel at the TTF hub in the Netherlands grew by almost 24% and for the first time since March 9 approached €149 per MWh, or about $1,608 per 1,000 cubic meters.

Since the beginning of the week, gas on the European market has almost doubled in price.

Quotes began to rise sharply against the backdrop of a reduction in the supply of Russian raw materials to Germany via the Nord Stream pipeline (SP).

As early as June 14, Gazprom announced a forced reduction in fuel pumping through the joint venture.

The reason for this decision in the corporation was the untimely return of gas compressor units from repair by the German company Siemens and the identified technical malfunctions of engines at the Portovaya compressor station.

Later, Gazprom announced the shutdown of another Siemens gas turbine engine due to the end of the overhaul period before overhaul.

As a result, in a few days the productivity of the Portovaya compressor station fell by more than two times - from the planned volume of 167 million cubic meters.

m per day up to 67 million cubic meters.

m.

Thus, the flow of gas to Germany through Nord Stream has decreased to 40% of the total capacity of the pipeline.

This is stated in the report of the Federal Network Agency of the country.

In Germany, Gazprom's actions were considered politically motivated.

As German Minister of Economy and Climate Protection Robert Habek said the day before, all justifications for technical problems in the work of Portovaya are “far-fetched”, and the reduction in gas pumping is intended to “inspire uncertainty and drive up prices”.

A similar point of view is shared by German Chancellor Olaf Scholz.

Meanwhile, in Gazprom, the problems with gas supplies that arose were explained by the “sanctions confusion” of the West itself.

Such a statement, in particular, was made by the head of the company, Alexei Miller, at the St. Petersburg International Economic Forum (SPIEF).

According to him, the German Siemens carries out engine maintenance only at one plant in Canada.

At the same time, Ottawa had previously imposed sanctions against Gazprom, and now Siemens cannot take already repaired engines from the Canadian side.

“I can tell you objectively right now: today there is no way to solve the problem that arose at the Portovaya compressor station.

Well, there is no such solution, you understand?

Siemens is silent for now.

Trying to find this solution.

But there is no solution.

Well, of course, Gazprom is reducing the volume of supplies to Europe,” Miller added.

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  • © Alexey Danichev

According to Gazprom's latest estimates, since the beginning of 2022, gas exports to non-CIS countries have decreased by 28.9% compared to the same volume in 2021 and amounted to 65.6 billion cubic meters.

m. However, as noted by Alexey Miller, during the same time the cost of energy resources has increased several times, so the company "is not offended by anyone."

“We are witnesses of price shocks.

We have witnessed extreme volatility in commodity markets and very high inflation.

But all this did not start yesterday, not today - and here we must say "many thanks" to foreign regulators, in particular European regulators, ”added Miller.

Price signal

Although at the moment the demand for gas in the EU countries has decreased compared to the winter period, the reduction in pumping volumes may lead to an even more tangible shortage of raw materials in the region.

In this case, the cost of fuel will continue to grow, Nikolai Pereslavsky, an employee of the Department of Economic and Financial Research at the CMS Institute, did not rule out.

“Sooner or later, it would have come anyway, because you need to understand that the equipment does not last forever and it needs repair.

Certainly European countries have shot themselves in the foot with sanctions to some extent.

Over time, they will either have to buy extremely expensive gas, or somehow resolve the issue with Canada and sanctions in general, ”the source said.

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As Natalya Milchakova, a leading analyst at Freedom Finance Investment Company, suggested, Alexey Miller's words about the lack of a solution to the problem only increased the panic among participants in the European gas market.

As a result, stock players began to actively buy raw materials, until it rose in price even more, the specialist explained.

“If we talk about alternative gas supplies to Europe, one of the LNG-producing plants in the United States is currently undergoing repairs.

This, in turn, also contributes to a speculative increase in demand for energy resources in the EU and, accordingly, an increase in prices, ”Milchakova added in a conversation with RT.

The observed rise in gas prices and the simultaneous growth of oil prices risk leading to an even greater rise in consumer prices for goods and services in Europe, experts say.

According to the latest Eurostat estimates, in May, annual inflation in the euro area accelerated to 8.1%, the highest level on record.

At the same time, in some countries of the region, the value reaches 18-20%.

“To curb inflation, the European Central Bank is going to raise the base interest rate from zero to 0.25% per annum in July, but it looks like it was too late with such a measure.

As long as gas supplies from Russia to Europe are limited, mainly due to sanctions, price spikes in the European market will become quite an everyday event,” Milchakova said.

As Nikolai Pereslavsky explained, the rise in gas prices will inevitably lead to higher electricity prices for businesses.

Companies, in turn, will begin to cover rising costs by increasing the cost of their products.

“Under these conditions, EU citizens are already beginning to increasingly protest against the policies of the European Union.

The fact is that what is happening now is extremely hard on the comfort of ordinary Europeans, to which they are so accustomed, ”concluded Pereslavsky.