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Gas prices in the UK and EU rose by 17% after Germany's energy regulator suspended certification proceedings of the controversial Nord Stream 2 natural gas pipeline from Russia to Germany.
Wall Street Journal reported that gas prices in the Netherlands, the regional benchmark, shot to three-week highs in response to the suspension. In the U.K., gas prices jumped 9.4% to about £2.24 ($3.01), a therm. Gas prices in Europe rose by almost 10%, after the suspension of the certification.
Natural gas is used to heat most homes and generates a major chunk of Europe’s electricity. Gas prices were already high before this latest setback for the project.
Shortage of fuel supplies has raised concerns that there won’t be enough gas to power the continent by the spring. A cold winter in Europe last year put further pressure on supplies and, as a result, stored gas levels are much lower than normal.
Pipe blockage
Germany’s Federal Network Agency has blocked the certification of Nord Stream 2 AG, a Switzerland-based unit of Russian energy giant Gazprom. The decision has come after the firm decided not to become a German company and instead set up a subsidiary to own and operate the part of the pipeline that runs through Germany.
The certification will start again if the company moves essential assets and personnel to the German subsidiary. If the agency approves the pipeline, the decision will be passed to the European Union.
The construction of the project was completed in September this year but gas is yet to flow via the pipeline. The project is opposed by Washington as it circumvents U.S. allies, Ukraine and Poland, and could increase Europe’s dependency on Russian gas.
However, the U.S. waived sanctions on the project earlier this year, clearing a path for its completion. Experts believe that President Joe Biden intends to mend U.S.-Germany relations as he seeks the help of Europe's biggest economy on everything from the economy to relations with China and Iran.
(With inputs from Wall Street Journal)
Picture Credits: BBC