MOSCOW, September 6 – PRIME, Andrey Karabyants. Futures for natural gas in Europe on the index of the key hub Title Transfer Facility (TTF) on Monday, September 5, rose by 30%, reacting to the news that Gazprom completely stopped deliveries via Nord Stream, the main pipeline used by for the export of Russian gas to Germany and a number of other European countries. The price at the moment exceeded the level, which corresponds to 2900 dollars per thousand cubic meters. In fairness, it should be noted that in August the pipeline was already used at 20% of its installed capacity, which is 55 billion cubic meters per year.
Then, on September 6, the price corrected, but nevertheless remained very high, at a level that corresponds to about 2,300 dollars per thousand cubic meters.
Press Secretary of the President of the Russian Federation Dmitry Peskov once again informed European “partners” that the reason for stopping the “Nord Stream” are anti-Russian sanctions that prevent the maintenance of the gas compressor unit (GCU) by the German company Siemens.
European capitals accuse Moscow of using gas supplies as a weapon against the “collective West”, which imposed sanctions against Russia after the start of a special military operation (SVO) in Ukraine.
The head of the German Foreign Ministry, “green” Annalena Berbock, said that the Russian side resorted to blackmail and threatened the energy security of her country. She urged not to lift sanctions against Moscow and “to say clearly that we will not succumb.”
ONLY INTERVENTION FROM THE TOP
Over the year, gas in Europe has risen in price by more than 400%. Some EU energy companies have already declared their financial insolvency, because they cannot pass on to the consumer the growing costs of buying gas – the authorities limit the growth in electricity prices for the population and industrial enterprises.
Finnish Minister of Economy Mika Lintila said that the situation in the energy market in Europe resembles the threshold of the 2008 crisis, which began after the news of the bankruptcy of Lehman Brothers.
The authorities of European countries are forced to allocate billions of euros in assistance to energy companies in order to prevent their bankruptcy in anticipation of the heating season. It is also planned to allocate large funds in the form of subsidies to the population to pay bills for electricity and heating. Due to the rapid rise in gas prices in European countries, including Germany, many households stock up on other types of fuel – primarily coal and firewood.
Finland will send 10 billion euros, and Sweden – 250 billion crowns (23 billion euros) in the form of state guarantees for energy companies. Germany, which depends on Russian gas supplies more than other EU countries, has already provided a multibillion-dollar bailout to bail out Uniper, one of the country’s largest energy companies, from bankruptcy.
“The government program is the last resort to improve the financial situation of companies. Otherwise, they face bankruptcy,” said Finnish Prime Minister Sanna Marin.
The gradual reduction and then complete cessation of supplies via Nord Stream caused great damage to the market of “united” Europe: the shares of European companies – not only energy ones – fell significantly, the euro fell against the dollar to its lowest level in the last 20 years.
Russia, true to its contractual obligations, continues to supply gas to Europe through Ukraine, despite ongoing hostilities between the RF Armed Forces and armed formations controlled by the current regime in Kyiv.
However, the volume of deliveries decreased from 109 million cubic meters per day to 40-43 million cubic meters per day. The Ukrainian side refused to accept Russian gas supplied in transit to Europe through the Sokhranivka border gas measuring station (GIS), one of two operating GIS. Now transit is carried out only through the GIS “Sudzha”. The official representative of “Gazprom” said that on September 6, the volume of transit should be 42.4 million cubic meters per day. The application of the Russian company for pumping gas through the GIS “Sokhranivka” was once again rejected by the “Ukrainian partners”.
In the West, they fear that if the situation in Ukraine worsens and the area of hostilities expands, Ukrainian transit of Russian gas to Europe may stop completely. If this happens in winter, many gas consumers in Eastern and Central Europe risk being left without heating.
WILL THERE BE METALLURGY IN EUROPE
The reduction in natural gas supplies from Russia and the associated increase in electricity prices have led to a reduction in industrial production in the EU countries, primarily in the metallurgical industry.
From August last year to the beginning of September, the production of zinc and aluminum in Europe has more than halved. Due to high prices for gas and electricity, non-ferrous metallurgy enterprises become unprofitable, and their products become uncompetitive.
Due to a rise in electricity prices by 20%, as reported by Reuters on September 6, the production of Aluminum Dunkerque, France’s largest aluminum plant, has been reduced. The plant produced 285 thousand tons of metal per year. Restoration of production is expected not earlier than next year.
In addition, giant Alcoa Corp announced a one-third reduction in aluminum production at its plant in Norway, and Norsk Hydro announced plans to close the Slovalco plant in Slovakia. Speira intends to halve production at its main plant in Germany. A complete shutdown of the large Budel zinc plant in the Netherlands, owned by Nyrstar, is planned.
Ferrous metallurgy enterprises are also closed. Belgian Aperam Mill stopped production at the plant in the city of Genk and reduced output at the Chatelet Mill plant. The Spanish Acerinox plans to reduce steel production by two thirds, 85% of whose employees will be transferred to temporary work.
ArcelorMittal, the world’s second largest steelmaker in terms of output, will shut down its Bremen steel plant for an indefinite period at the end of September.
“High gas and electricity prices have a very negative impact on competitiveness. Moreover, from October the German government plans to charge a gas usage fee, which will be an additional burden for us,” said Rainer Blaschek, Chief Executive Officer of ArcellorMittal Germany.