Susanna Twidale and Nora Buli
LONDON/OSLO (Reuters) – European gas prices surged on Monday, shares fell, euro Falling supply routes, sending a new tsunami to the EU economy, which has not yet recovered from the COVID-19 pandemic.
State-controlled Gazprom (MCX: GAZP) in Russia said it would stop passing Nord Stream 1 due to a malfunction Pipelines transport natural gas.
Europe accuses Russia of weaponizing energy supplies in retaliation for Western sanctions on Ukraine over Moscow’s incursion. Russia says the West has waged an economic war and sanctions have hampered pipeline operations.
Many European electricity distributors have collapsed and some major generators may be at risk, hit by caps that limit price increases they can now pass on to consumers or by hedging petrol price bets Stuck in 400% more than a year ago.
“This has the ingredients to be a Lehman Brothers in the energy sector,” Finnish Economic Affairs Minister Mika Lintila said on Sunday, referring to the Bank of America that collapsed and heralded the global financial crisis.
Finland aims to provide 10 billion euros ($10 billion) and Sweden 250 billion SEK ($19 ) ) billion) to provide liquidity guarantees to its power companies. Germany, which is more reliant on Russian gas than most EU countries, has offered electricity utility Uniper a multi-billion-euro bailout.
is under threat of bankruptcy,” said Finnish Prime Minister Sanna Marin.
Benchmark gas prices soared on Monday 80% to 400 euros per megawatt hour (MWh) after Russia said on Friday that a leak at Nord Stream 1 equipment meant it would be closed last week Continued shutdown after three-day maintenance shutdown.
European financial markets are teetering from the news.Euro falls to 20 year European stocks tumbled at the lows.
Nord Stream 1, which flows under the Baltic Sea to Germany, has historically supplied about a third of Russia’s gas exports to Europe, although it runs at only 10 Percentage of capacity before maintenance disruption last week.
EU politicians say Russia has been making excuses to stop supply The Kremlin said on Monday that the EU’s anger over rising energy prices was the result of a “harmful” decision by the EU government.
Russia also passed to Europe The pipeline runs through Ukraine, the other main route. But these supplies have also dwindled during the crisis, leaving the EU racing to find alternative supplies to replenish gas storage facilities in winter.
Several EU countries have An emergency plan was launched that could lead to a spike in energy rationing and inflation and rising interest rates have fueled recession fears.
Some energy-intensive industries in Europe, such as fertilizer makers and aluminum producers, have Production has been scaled back. Other industries, already grappling with chip shortages and logistical standoffs, face skyrocketing fuel bills.
“Supplies are hard to come by and it’s getting harder to replace every bit of gas that doesn’t come from Russia,” said Jacob Mandel, senior associate for commodities at Aurora Energy Research.
Energy ministers from EU countries will meet on Sept. 9 to discuss options for reining in soaring energy prices, including those seen by Reuters Gas price caps and emergency credit lines for energy market participants, according to a document from . Ready in gas delivery.
Germany is in the second phase of a three-phase emergency gas plan. The third phase will see some industry rationing.
In alternative supply Germany is installing temporary liquefaction natural gas (LNG) terminals as a stopgap measure while building permanent facilities so it can transport gas from further afield.
“There is currently a lot of room for importing LNG to replace ( Russia) gas, but when it gets colder and winter demand starts to pick up in Europe and Asia, there is only so much LNG that Europe can import,” Mandel said.
The global LNG market is already tight as the world economy absorbs supply amid the pandemic recovery. The Ukrainian crisis further increased demand.
Norway, a major European producer, has been pumping more gas into the European market, but has been unable to fill Russia.
Klaus Mueller, president of the German Federal Network Agency’s energy regulator, said in August that even Germany’s gas stores 100% full, if Russian gas stops flowing completely, they will be emptied in 2-1/2 months.
Storage facilities in Germany are now approximately 85% full, while facilities across Europe were last week at 80% The goal.