Gas Price Rises Sharply Due to Problems with Delivery from Russia

European gas prices skyrocketed on Tuesday afternoon. That came after Russia’s state-owned gas company Gazprom said technical problems could cut supply through a major gas pipeline to Germany by 40 percent.

 

This is the so-called Nordstream pipe. According to Gazprom, only about 100 million cubic meters of gas per day could flow through that pipeline, instead of the planned 167 million. This was partly because the German industrial group Siemens has not returned certain pump equipment that had been sent to the company for repair.

Bloomberg news agency reports based on insiders that a turbine that pumps the gas through the pipeline was in Canada for maintenance. Because of the sanctions, that device had to stay there. A second turbine that needs maintenance cannot be sent to Canada because of the sanctions against Russia.

Shortly after the publication of this message, the price for gas on the Amsterdam gas exchange, which is indicative of European prices, rose by about 13 percent to 94 euros per megawatt-hour. At the beginning of the afternoon, gas in the British market became about 11 percent more expensive.

The gas price went up earlier because less gas from Norway entered the European market. An explosion at a liquefied natural gas (LNG) terminal in Texas also contributed to rising prices. As a result, the supply of LNG from the United States may be limited for some time.