European gas prices increase as Russian pipeline maintenance brings anxieties of a complete shutdown

August 24, 2022: -On Monday, European natural gas prices increased after Russia’s state-owned energy giant Gazprom said it would shut down Europe’s single most significant piece of gas infrastructure for three days from the month

‘s end. The unscheduled maintenance is working on the Nord Stream 1 pipeline, which runs from Russia to Germany through the Baltic Sea, deepening a gas conflict between Russia and the European Union and exacerbating both the risk of a recession and a winter shortage.

The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, bounced 19% on Monday to reach 291.5 euros ($291.9) per megawatt hour.

On Friday, the contract closed at a record high of 244.55 euros per megawatt hour, registering its fifth consecutive weekly gain.

On Friday, Gazprom said the shutdown was due to the pipeline’s only remaining compressor required servicing. Gas flows via the Nord Stream 1 pipeline will be suspended for three days from August 31 to September 2.

Gazprom said gas transmission would resume at 33 million cubic meters daily when the maintenance work is completed “provided that no malfunctions are identified.”

The announcement of the temporary shutdown comes as European governments scramble to fill underground storage facilities with natural gas supplies to have enough fuel to keep homes warm during the coming months.

Russia recently reduced natural gas supplies to Europe, with flows via the Nord Stream 1 pipeline running at just 20% of the agreed-upon volume.

Moscow has accused wrong and delayed equipment for the sharp drop in gas supplies.

However, Germany considers the supply cut a political maneuver designed to sow uncertainty across the bloc and boost energy prices amid the Kremlin’s onslaught against Ukraine.