Spot gas prices in Europe with the beginning of a new working week have received a new impetus for continued growth. Several hours are left before the shutdown of the Yamal-Europe gas pipeline. The capacities of this pipeline, as well as additional Ukrainian capacities, will be booked at short-term auctions (which will leave tensions in the market).
The price for delivery on Tuesday at the TTF hub in the Netherlands reached $ 464 per thousand cubic meters. The European market baseline prices (denominated in euros per thousand kilowatt-hours) began to resemble the temperature of an ARVI patient. For example, the closing price of a contract for Tuesday delivery on TTF is 37.8 euros per MWh.
On Monday, booking auctions for gas transmission capacities for the coming and subsequent years were held throughout Europe (the “gas year” starts on October 1). The auction for additional "solid" gas transmission capacities for pumping gas through Ukraine (9.8 million cubic meters per day) was held in addition to the booking on the basis of a long-term contract (40 billion cubic meters per year is 109 million cubic meters per day ).
The Polish gas transmission operator Gas System has set the capacity of the Yamal-Europe gas pipeline at 79 million cubic meters. m per day. The capacity offered at both auctions remained unclaimed. And while shippers can book capacity at quarterly and monthly auctions, a new degree of uncertainty immediately affected prices.
The liberalization of the European gas market has led to the rejection of long-term transit agreements. They were replaced by transparent auction booking - to eliminate unnecessary booking costs for excess capacity from the gas price. As a result, shippers are free to book only the amount of capacity they need, and for the time when it will be necessary.
On Tuesday morning until Saturday, the international gas pipeline "Yamal-Europe", which runs from Russia through Belarus and Poland to Germany, will stop. It delivers about 100 million cubic meters per day. m of gas. Although Gazprom warned about the routine of this event and the readiness of consumers for it, the European market was nervous about this repair.
Repairs on Russian gas pipelines have never had a strong impact on European prices. However, this year, after a cold winter that devastated the underground storage facilities, the European market has become in dire need. Globally, gas consumption quickly recovered after covid lockdowns, but production after the investment sequestration in 2020 is not keeping pace with the market.