Gas prices jump 17% in a day as two more energy firms collapse and consumers are warned to brace for bills soaring by £475-a-year amid new fears about European supplies
- Fears of winter energy crisis over Nord Stream 2 pipeline arose again on Tuesday
- Russia is accused of using the pipeline to deprive Europe of much-needed gas
- German regulators suspended approval for the pipeline as wholesale prices rose
- Boris Johnson told EU it must choose between Ukraine’s freedom or buying gas
UK gas prices jumped 17 per cent in a day after two more energy firms collapsed, with consumers now being warned to brace for bills soaring by £475-a-year amid new fears about European supplies.
Concerns of a winter energy crisis were renewed on Tuesday after a German energy regulator suspended approval for a pipeline that would carry Russian gas directly across the Baltic to Germany and wider Europe.
Construction of the Nord Stream 2 pipeline was delayed by United States sanctions and is strongly opposed by many European countries who believe it is designed to freeze Ukraine out of transit fees for shipping Russian gas.
The delay came hours after Boris Johnson told the EU it must choose between Ukraine’s freedom or buying gas from Moscow when he linked the £9 billion pipeline project to growing tensions in the East.
Wholesale prices subsequently shot up across Europe amid worries Russia will not increase deliveries of gas via alternative routes if the Nord Stream 2 pipeline is blocked.
Wholesale gas in Britain was worth around 60p per therm at the start of 2021, but that figure reached 240p per therm on Tuesday.
It remains below the record of 350p set in early October.
The 750-mile Nordic Stream 2 pipeline would carry Russian gas directly across the Baltic to Germany and wider Europe
Map showing points of origin and destination of the Nord Stream pipe (solid line) and Nord Stream 2 pipeline (dotted line) between Russia and Germany. Putin hoped Nord Stream 2 would be finished two years ago, allowing Russia to bypass Ukraine in the south, which carries 50% of gas from Russia out via Poland
There are further fears, too, that the surge will send more fragile energy suppliers to the brink within weeks and pile pressure on heavy industry already feeling the strain.
Two more small suppliers – Neon Reef and Social Energy Supply, with a combined 35,000 customers – collapsed after the price hike.
Leading trader Trafigura has claimed Europe could face ‘rolling blackouts’ over the winter months due to a gas shortage.
German officials have said the suspension was ‘temporary’ and the decision was seen as a technical, rather than political, one.
Although Nord Stream 2 is led by Russia’s Gazprom, Germany’s Federal Network Agency (FNA) said the Swiss-based consortium running the European end of the project would need to form a company under German law to obtain an operating licence.
It comes after Western politicians – including Defence Secretary Ben Wallace – accused Moscow of using the pipeline to deprive Europe of much-needed gas supplies and drive prices to record highs.
Russia has also been accused of reducing supplies through existing routes as part of attempts to pressure Germany into granting approval.
Despite fears, though, Mr Johnson maintained the UK’s opposition to the pipeline citing concerns it ‘would have significant security implications for the region’.
Russian President Vladimir Putin has been accused of using the pipeline issues to deprive Europe of much-needed gas
German Chancellor Angela Merkel. Regulators suspended approval for the pipeline on Tuesday
The price hike is also understood to have been driven by a reduction in flows of Norwegian gas into the UK due to an outage at the Troll gas field.
Analysts at Energyhelpline said if the prices seen on Tuesday were to continue until February, the UK energy regulator Ofgem could raise the cap on household bills on standard tariffs by £475.
This would take it from the current level of £1,277 to £1,752.
The 750-mile Nord Stream 2 pipeline was completed in September, but is still awaiting regulatory approval.
If given the green light, it would double Russia’s gas export capacity to central Europe, whole also enabling Moscow to bypass Ukraine.
Although the UK does not import much gas directly from Russia, it receives a lot from Europe – which gets around 40 per cent of its supplies from Russia.
Prices in Britain ballooned further after a fire at a subsea power cable with France shut off more electricity from the continent in September.
Prime Minister Boris Johnson told the EU it must choose between Ukraine’s freedom or buying gas
The sky-high prices have been seen most profoundly in the UK through the sudden collapse of a string of small energy suppliers – with more than 20 going bust since the start of September.
Sam Peek, analyst at Cornwall Insight, said prices could keep climbing into next week if there is cold weather and periods of low wind.
With Mr Wallace visiting Ukraine, Downing Street has said the Government will continue to speak to European allies and Kiev over the pipeline.
‘Ukraine currently hosts the largest existing pipeline for Russian gas and transit fees have historically made up a large proportion of their GDP so Nord Stream 2 would divert supplies from the Ukraine that would have significant consequences for its economy,’ the Prime Minister’s official spokesman said.
‘And it could also have significant security implications and the transit of Russian gas through the Ukraine is largely seen as a deterrent against further Russian aggression.’
Germany suspends approval for Russia’s Nord Stream 2 gas pipeline hours after Boris Johnson told EU it must choose between Ukraine’s freedom or buying gas from Moscow
By Ross Ibbetson for MailOnline
Germany energy regulator has suspended approval for Russia’s Nord Stream 2 pipeline hours after Boris Johnson told the EU it must choose between Ukraine’s freedom or buying gas from Moscow.
Construction of the pipeline, which will carry Russian gas directly across the Baltic to Germany, was delayed by United States sanctions and is strongly opposed by many European countries who believe it is designed to freeze Ukraine out of transit fees for shipping Russian gas.
German regulator, Bundesnetzagentur, said on Tuesday it had suspended the certification process because the Swiss-based consortium behind Nord Stream 2 needed to form a company under German law to secure an operating licence.
Skyrocketing gas prices jumped 9 per cent on the regulator’s move amid fears that Europe will face a crippling shortage this winter and be forced to bow to Vladimir Putin’s demands to keep houses warm on the Continent.
It comes as Putin faces fury for two crises on Europe’s doorstep: the ‘weaponising’ of migrants on the Polish border by the Kremlin-backed Belarusian tyrant Alexander Lukashenko, and a buildup of Russian troops on Ukraine’s eastern front.
Germany, like much of Europe, relies on Russia for its natural gas, accounting for around 40 per cent of Berlin’s imports. That compares with under 5 per cent for the UK, which imports most of its gas from Norway.
Moscow has already used a route under the Baltic Sea for Nord Stream 1 – the predecessor to Nord Stream 2 – which has a capacity of 55 billion cubic metres (bcm), equivalent to half Germany’s annual gas usage.
Nord Stream 2 will double that and make Germany a central arrival hub for European gas volumes for onward distribution.
The Kremlin was not immediately available to comment.
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