Gas prices in Europe tumble as Russia’s Gazprom promises to launch Nord Stream 2 this year
The European gas prices, which have soared by 200% since the beginning of the year, have tumbled.
Gas futures on the ICE exchange fell by almost 10% after the Russian gas giant Gazprom announced the launch of Nord Stream-2 this year.
September contracts pegged to spot quotes of the EU's largest gas hub TTF in the Netherlands are trading at around $504.8 per thousand cubic meters, although at the beginning of the week they were at more than $ 570.
At the moment, the quotes fell below of $500, which the market has not seen since the beginning of August.
Nord Stream 2 AG chief executive Matthias Warnig told the German newspaper Handelsblatt that work on the long-suffering pipeline, Russia's third attempt to bypass Ukraine in gas transit, would be "completed by the end of August.
Another two to three months will be spent on pressure testing and certification. According to Warnig, the testing and certification have already started on completed first branch.
Gazprom, in turn, confirmed that the start of gas supplies through Nord Stream-2 will take place this year. The expected volume will be 5.6 billion cubic meters, Gazprom said.
The first line of the pipeline was completed in June this year. Now the Russian pipelaying barge Fortuna continues work on the final section of the second branch.
"If we assume that in December the pipeline will reach a load of 70% of the projected capacity, and the volume will be gradually increase, it is likely that Gazprom proceeds from the fact that full-fledged deliveries can begin around October," says Dmitry Marinchenko, senior director of the natural resources and commodities group at the international rating agency Fitch.
Alexey Grivach, deputy head of the Energy Security Fund, is in solidarity with him, who noted that if deliveries through Nord Stream 2 begin from the beginning of the new gas year (October 1), then delivery volumes may be higher.
"If we are talking about the commissioning of one line, which was completed in June, and proceed from the fact that it will work at full capacity until the end of the year, then we are talking about the beginning of deliveries at the end of October, when the heating season usually starts," he points out.
As for prices, even the current $ 490 is very expensive, Marinchenko believes: "Until Nord Stream 2 is launched and it becomes clear what additional volumes Gazprom will be ready to supply to Europe, volatility in the market will remain high, both price growth and correction are possible."