Russian producer Gazprom on 19 August announced three days of maintenance on Nord Stream 1 starting on 31 August, curtailing all gas flows on the key pipeline to Europe.
Gazprom stated in a Telegram post that gas flows would resume to 33mcm/day by the end of the maintenance period, in line with current flows. The update sent the ICIS TTF September ‘22 contract surging higher during after-hours trading.
“The prospect of Gazprom shutting down Nord Stream 1 for three days is only going to spook the market. Gas prices jumped at the very end of the trading day as the maintenance was announced and could easily rise further on Monday as buyers assess whether they really believe the pipe will return to service as stated by the Russian supplier,” said Tomas Marzec-Manser, Head of Gas Analytics at ICIS.
Marzec-Manser added that the three day duration would likely be taken “with a massive pinch of salt” by the market, as concerns would likely persist on whether the pipeline even returns to service, on time or at all.
In the Telegram post, Gazprom said that its only remaining compressor, a Trent 60 gas compressor, would be shut down for maintenance, which would include inspections for any leaks, checking safety valves and the air flow system.
European gas supply uncertainty, from curtailed Russian flows to reduced Norwegian supply on planned and unplanned maintenance, has already driven the ICIS TTF benchmark front month contract to five successive record highs starting on 15 August.
The TTF September ’22 closed at $72.943/MMBtu on 19 August, but could move even higher in the coming sessions, as European countries scramble to impose demand reduction plans and start up new LNG infrastructure by the fourth quarter.
The historic surge in TTF has also affected global LNG spot prices, as the ICIS East Asia Index (EAX) remains at an unprecedented discount to TTF since late June.
The EAX September ’22 assessment was $56.55/MMBtu on 19 August, which means a TTF premium of more than $14.50/MMBtu.
Such an enormous premium over Asia ensures that spot LNG will be driven to Europe over winter and into the prompt period as global LNG supply remains tight.
Source: ICIS (https://www.icis.com/explore/resources/news/2022/08/19/10797713/russia-s-gazprom-abruptly-imposes-three-day-maintenance-on-nord-stream-1)