Europe Natural Gas Prices Rise as Nord Stream Leaks Dash Faint Hopes

By Geoffrey Smith — European natural gas prices rose on Tuesday, after news of leakage from both strands of the Nord Stream pipeline under the Baltic Sea dashed any faint hopes of a resumption of more normal levels of imports from Russia over the coming winter. 

By 05:30 ET (09:30 GMT), the front-month , which serves as a benchmark for northwest Europe gas prices, was up 8.8% at 189.10 euros a megawatt-hour, having hit a two-month low of 168.50 EUR/MWh on Monday. 

The movement came after Sweden’s Maritime Authority warned of more leaks on the Nord Stream pipelines that run from Russia under the Baltic Sea to Germany. The second line had been filled with gas but had not begun commercial operations before Russia’s invasion of Ukraine, while Russia has stopped flows on the first line citing mechanical problems – an explanation that the German government dismissed as a fabricated pretext for a politically-motivated stoppage. 

The SMA said it had detected two leaks on the first line, while Denmark’s maritime safety authority had detected a leak on the second line on Monday. Both agencies instructed ships to keep at least five nautical miles away from the location of the leaks due to the presence of explosive gas. 

The pipeline operator Nord Stream said it was investigating. Leaks on undersea gas pipelines are extremely rare, and the discovery of three in close proximity to each other within 24 hours raised suspicions of sabotage, bolstering Russia’s campaign of economic pressure on Europe to drop its support for Ukraine. 

“Well played by Russia – complete deniability and “we cannot deliver gas even if we wanted to…”” said Hans Tino Hansen, founder and CEO of the Risk Intelligence consultancy in Copenhagen, via Twitter.

If sabotage is confirmed, it would add to a growing body of evidence of Russian attacks on civilian infrastructure to further its political goals in Ukraine, which are now explicitly the annexation of the south and east of the country. That will add to concerns that it may be willing to damage the nuclear reactors at Zaporizhzhya and other Ukrainian power stations, as it seeks ways to undermine a Ukrainian opponent that has made significant advances on the battlefield in recent weeks. 

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