
European gas prices rose 30% on Monday after Russia announced that one of its main gas pipelines to Europe would remain closed indefinitely, reigniting fears of gas rationing in the European Union this winter.
The benchmark gas price rose to 272 euros per megawatt-hour (MWh) at the market open after Russia said on Friday that a leak at facilities on the Nord Stream 1 pipeline would remain closed after a three-day break in repair work since last week.
Natural gas contracts in the Netherlands for October fell to €256, up 23% on the day, almost 400% higher than a year ago.
This year’s price hikes have already hit consumers and forced some industries to shut down production.
Europe has accused Russia of weaponizing energy supplies in response to Western sanctions imposed on Moscow over its invasion of Ukraine. Russia says that the West has unleashed an economic war, and that sanctions have hindered the maintenance of the pipeline.
The Nord Stream gas pipeline, which runs along the bottom of the Baltic Sea to Germany, previously supplied about a third of the gas exported by Russia to Europe. It was already running at just 20% capacity before the streams were shut down last week for maintenance.
The supply of Russian gas through Ukraine, another important route, was also cut off, prompting the EU to look for alternative sources of supply to fill gas storage for the winter.
Several states have launched contingency plans that could lead to energy rationing and raise the prospect of a recession.
“Supply is hard to secure, and it’s getting harder and harder to replace every drop of gas that doesn’t come from Russia,” said Jacob Mandel, senior commodities associate at Aurora Energy Research.
High electricity costs have already forced some energy-intensive industries, including fertilizer and aluminum producers, to cut production and prompted EU governments to pour billions of euros into household aid programs.
EU energy ministers are scheduled to meet on September 9 to discuss options to curb the rise in energy prices, including gas price caps and emergency credit lines for energy market participants, the statement said. Document seen by Reuters.
German Chancellor Olaf Scholz said on Sunday that Germany, the EU’s economic powerhouse and Europe’s largest gas consumer, is preparing to completely cut off gas supplies.
Source: Hot News RO

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