Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Kremlin: Nord Stream 2 start will help cap gas prices in Europe

Published 15/09/2021, 16:28
© Reuters. FILE PHOTO: Kremlin spokesman Dmitry Peskov attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 4, 2021. REUTERS/Evgenia Novozhenina
BP
-
NG
-
GAZP
-

By Vladimir Soldatkin

MOSCOW (Reuters) - A rapid startup of the Nord Stream 2 gas pipeline from Russia to Germany could help calm record-high gas prices in Europe, Kremlin spokesman Dmitry Peskov told reporters on Wednesday, as Moscow awaits for regulatory clearance for gas flows to begin.

Russia announced last week that it had completed construction of the $11 billion Nord Stream 2 to Germany, doubling its gas exporting capacity via the Baltic Sea. However the start of gas flows via the route needs the approval of Germany's regulator, which may take up to four months.

"Undoubtedly, the quickest launch of Nord Stream 2 would significantly balance out the pricing parameters of natural gas in Europe, including on the spot market. That's obvious. The demand is high," Peskov told a daily conference call with reporters.

Spot prices in the Dutch TTF gas hub reached a record high 79 euros per megawatt hour, or more than $960 per 1,000 cubic metres, on Wednesday amid low levels of underground gas storage in Europe. [NG/GB]

A record run in energy prices that pushed European electricity costs to multi-year highs is unlikely to ease before the year-end, pointing to an expensive winter heating season for consumers.

Last week, Russian President Vladimir Putin said that European customers of Kremlin-owned energy giant Gazprom (MCX:GAZP) were "rubbing their hands with glee" over long-term gas contracts which are tied to oil prices and are less volatile.

Gazprom's head Alexei Miller said on Wednesday that gas will not start flowing via Nord Stream 2 on Oct.1, as had been reported by Bloomberg.

ROSNEFT'S GAS BUSINESS

Interfax cited Deputy Prime Minister Alexander Novak as saying on Wednesday that Russia's energy ministry is due to prepare a report in the coming days on the possibility of Rosneft exporting gas to Europe via the Nord Stream 2 pipeline.

Currently, Gazprom has exclusive rights for Russian pipeline gas exports and European regulations, the so-called third energy package, require third-party access to pipelines.

Kirill Tachennikov from Moscow-based Sinara financial corporation, said it was still not clear yet if Rosneft's possible participation in gas exports via Nord Stream 2 would help Russia raise gas supplies through the route.

"As far as the third energy package is concerned, there is no clarity on EU's position on access for other Russian companies to the new pipeline," he said.

The Energy Ministry did not immediately respond to requests for comment. Rosneft declined to comment.

Oil-focused Rosneft and its shareholder, BP (LON:BP), have long sought to export Russian natural gas to Europe as exports are more lucrative than domestic sales. Rosneft shares in Moscow jumped by more than 4% on the day in afternoon trade.

Igor Sechin, the powerful head of Rosneft and a long-standing ally of President Vladimir Putin, has repeatedly lobbied the Kremlin to curb Gazprom's export rights.

© Reuters. FILE PHOTO: Kremlin spokesman Dmitry Peskov attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 4, 2021. REUTERS/Evgenia Novozhenina

Gazprom said its natural gas exports outside the former Soviet Union year-to-date had increased by 17.4% year-on-year to 138.6 billion cubic metres.

Peskov said the possibility of Rosneft exporting gas to Europe had been raised repeatedly, but that no decisions had been taken yet.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.