The Nordic power market has experienced some new massive price climbs during the last few days. The reason behind this is first and foremost, that gas deliveries through Nord Stream 1, the most important pipeline between Russia and the EU, have been reduced further. Nord Stream 1 was already operating at very reduced power, and Russia has now reduced flows on the pipeline to only 20 % of the capacity.
Fears of shortages of gas during the coming winter have led to sky-rocketing gas prices, and the power prices follow gas upwards. On the Nordic power market, both the front-quarter contract (Q4-22) and the contract for 2023 have increased by 15 % since Monday morning, and both contracts are currently trading at record-high levels.
Russia’s official explanation for the decrease in gas flows is once again technical issues with the pipeline. This is the same explanation which the Russians used earlier this summer, to explain why they had reduced flows on the pipeline from full capacity to only 40 %. The EU leaders, first and foremost Germany, do however not quite believe this story. They think, that Russia instead uses gas as a weapon against the EU in the current diplomatic crisis which escalated following the Russian invasion of Ukraine back in February.
Now, the question is, what will happen to the Russian gas export during the coming weeks. The turbine, which the Russians claim they need to repair Nord Stream 1 and resume full export through the pipeline, has been sent to Saint Petersburg, and if the turbine is indeed the problem, there is a chance it can be solved within the nearest future. The EU does however fear, that Russia has no plans on increasing gas exports, and that flows on Nord Stream 1 could cease completely during the coming weeks. Energi Danmark will of course continue to follow the development closely.
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