German power prices jump as Nord Stream Russian gas link enters shutdown

The Nord Stream pipeline began annual maintenance on Monday

Mon, 11 Jul, 2022 - 10:47

Short-term German power prices more than doubled as calm weather and the expected halt of gas flows on the Nord Stream pipeline crimped supplies.

Power for Monday surged to the highest since early March with wind generation forecast to remain at very low levels for the next few days.

The Nord Stream pipeline began annual maintenance on Monday, with flows expected to stop for 10 days, but governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine.

The Nord Stream 1 pipeline transports 55bn cubic metres (bcm) a year of gas from Russia to Germany under the Baltic Sea. Maintenance lasts from July 11 to 21.

Operator Nord Stream AG confirmed the shutdown started as planned at 0600 CET and that gas flows would drop to zero a few hours later. Read full story Last month, Russia cut flows to 40% of the pipeline's total capacity, citing the delayed return of equipment being serviced by Germany's Siemens Energy in Canada.

Canada said at the weekend it would return a repaired turbine, but it also said it would expand sanctions against Russia's energy sector.

Europe fears Russia could extend scheduled maintenance to restrict European gas supply further, throwing plans to fill storage for winter into disarray and heightening a gas crisis that has prompted emergency measures from governments and painfully high bills for consumers.

German Economy Minister Robert Habeck has said the country should confront the possibility that Russia will suspend gas flows through Nord Stream 1 beyond the scheduled maintenance period.

"Based on the pattern we've seen, it would not be very surprising now if some small, technical detail is found and then they could say 'now we can't turn it on any more'," he said at an event at the end of June.

Kremlin spokesperson Dmitry Peskov dismissed claims that Russia was using oil and gas to exert political pressure, saying the maintenance shutdown was a regular, scheduled event and that no one was "inventing" any repairs.

There are other big pipelines from Russia to Europe, but flows have been declining gradually and Ukraine halted one gas transit route in May, blaming interference by occupying Russian forces.

Russia has cut off gas supplies to several European countries that did not comply with its demand for payment in roubles.

"The last few months have shown one thing: Putin knows no taboos. A complete halt to gas supplies through the Nord Stream pipeline cannot therefore be ruled out," said Timm Kehler, managing director of German industry association Zukunft Gas.