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EUROPE GAS-Prices soar on concerns over delay to Nord Stream 2 startup

European and British wholesale gas prices soared on Wednesday morning on fears flows through the new Nord Stream 2 pipeline will not come in time for the peak winter season.

The benchmark Dutch front-month contract TRNLTTFMc1 rose 7 euros to 101.00 euros per megawatt hour (MWh) by 1040 GMT, having earlier touched 101.60 euros/ MWh, its highest level since Oct. 18.

The Dutch contract for January TRNLTTFMc2 was up by 7.26 euros at 101.51 euros/MWh.

In Britain, the December contract TRGBNBPMZ1 rose 9.81 pence to 2.49 pounds per therm.

Traders said yesterday’s news that the German regulator has temporarily suspended its certification process for the Nord Stream 2 gas pipeline means it is unlikely the pipeline would begin operation until late on in the peak winter heating season at the earliest.

The market was already volatile on any changes to existing gas supplies from Russia, with the Kremlin signalling it would ramp up flows to Europe once its domestic stocks were replenished.

“There are growing fears therefore that Russia will not keep its promise of higher deliveries,” analysts at Commerzbank said in a daily research note.

“Especially as deliveries via the Mallnow (Yamal pipeline) entry point have hardly risen at all of late, and it seems that no additional transport capacities have been booked for other pipelines,” the analysts said.

Russian gas flows to Europe via Yamal, which runs through Belarus and Poland, remained steady on Wednesday morning, at an hourly volume of more than 12,500,000 kilowatt hours (kWh).

In other markets the benchmark Dec-21 EU carbon contract CFI2Zc1 was down 0.34 euros at 67.21 euros/tonne, having earlier hit a fresh record high of 67.91 euros/tonne.

High gas prices make it more economical for power companies to burn coal, which emits twice the amount of carbon dioxide as gas power plants, requiring more carbon permits.
Source: Reuters (Reporting By Susanna Twidale Editing by Robert Birsel)

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