The Kremlin today said that a rapid start-up of the controversial Nord Stream 2 pipeline would help to correct sky-high gas prices across Europe amid a squeeze in supply.
Spokesman Dmitry Peskov said: “Undoubtedly, the quickest launch of Nord Stream 2 would significantly balance out the pricing parameters of natural gas in Europe, including on the spot market. That’s obvious. The demand is high.”
His comments came as a record run in energy prices pushed electricity costs to multi-year highs, raising the prospect of an expensive winter for consumers.
Last week Russia announced that it had completed construction of the $11bn pipeline, which will allow it to export gas to Germany across the Baltic Sea.
It will take four months for the pipeline to get operating certification, Germany’s energy regulator has said.
As a result, Russia will not need to send its gas through Ukraine to get to the west, which was for a long time a source of major contention between Germany and the US.
But earlier this year the two countries reached a deal which saw the US drop its opposition to the pipeline in return for $200m investment into Ukraine.
At the moment, the rally in prices show no sign of abating. Today UK gas futures rose almost 12 per cent to a record 184.6p per therm, with a shortage of wind power further pushing up prices.
The steepling prices have forced two more energy suppliers out of the market in recent days, meaning that seven energy suppliers have gone bust this year.
London-based People’s Energy and Bournemouth supplier Utility Point have both ceased trading, Ofgem has confirmed, leaving nearly 500,000 people needing a new supplier.
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By City AM
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Therefore, it is up to Germany’s energy regulator to accelerate the process of granting Nord Stream 2 operating certification.
Moreover, Europe’s dependence on Russian piped gas supplies will continue to rise. The EU needs Russia more than Russia needs them. Furthermore, rising prices of LNG mean Russian piped gas is the cheapest source of supply for Europe.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London