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The price of gas in Europe has reached its historical maximum after another drop in supplies from Russia

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Natural gas is returning to the zone of extreme turbulence if it ever left it. The price of this fuel, which is essential for industry and power generation in major European countries, reached 230 euros per megawatt hour (MWh) shortly afterwards early Wednesday, a level not seen since early March the outbreak of war in Ukraine.

The umpteenth escalation in the reference market for the block, the Dutch TTF, comes after Russia carried out its threat this Wednesday morning to further cut gas supplies through Nord Stream 1 – the main gas pipeline linking the Eurasian giant to the EU, through which a third of all gas flows – and the state-owned company Gazprom accused the German company Siemens of pumping problems. And it leaves the price a step away from the 270 euros per MWh it reached at noon on March 7th.

After rising to €227, gas contracts for delivery in August closed the session at €205 after posting a 2.5% gain. The surge – the sixth in a row – comes at the height of the austerity season, with most EU countries stocking up ahead of a particularly tight autumn and winter: even if the 15% austerity plan in Twenty-seven ends up being met is literally the supply is by no means guaranteed.

The deputy CEO of the Russian gas giant Gazprom, Vitaly Markelov, on Wednesday accused Germany’s Siemens Energy of the pumping problems caused by the Nord Stream 1, which has been supplying gas at 20 percent of its capacity since Wednesday. This additional drop compared to the usual flow complicates the plans of European countries, especially Germany, to continue to replenish their hydrocarbon reserves in anticipation of a possible complete supply disruption by Moscow. The German authorities then accused Russia of using its dominant position in the energy market for a “power game”.

Markelov stressed that of the gas pipeline’s six pump-turbines, only one is working at full capacity; another is in Canada after repairs, and the remaining four have completed the 25,000 hours of service required for a thorough overhaul – which Gazprom says Siemens will perform.

Germany has denied Gazprom’s latest claims, saying there are no technical reasons for the German gas company to reduce gas production. Kremlin spokesman Dmitry Peskov assured on Wednesday that the Russian gas giant Gazprom is exporting as much gas as possible to Europe, blaming Western sanctions for the drop in supply.

The gap between Spain and the rest of the continent is widening

Spain is by no means immune to escalating prices for gas, a fuel it uses extensively to generate electricity: even more so in the height of summer, when wind power collapses and combined-cycle power plants are working at full capacity. However, the price in the Iberian Peninsula has separated itself from the rest of the continent within a few weeks. The Spanish-Portuguese market Mibgas closed this Wednesday at 148 euros per MWh, 57 below the Dutch TTF. The gap has widened even further over the past few days, which have seen the pattern change consolidate from what was usual before the energy shock: prices higher in the peninsula than north of the Pyrenees.

This shift is largely in response to the greater regasification capacity of Spain and Portugal: four out of ten gas processing plants arriving in Europe by ship are located on the peninsula and that, in times like those the bloc is experiencing today, they are big words. The subterranean reservoir on the peninsula also has significantly better filling levels than in most of the neighboring countries: 100% in Portugal and 76% in Spain, compared to a Community average that barely reaches 67%. Less filling also means less demand. And lower demand translates into lower prices in a global dogfight for the gas put on the market.


Source elpais.com

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