Natural gas is falling – At 163 euros per megawatt hour

European natural gas fell after Canada said it would return a turbine for Russia’s Nord Stream 1 pipeline to Germany, raising optimism that tensions with Moscow will ease, Bloomberg reported.

In particular, the Dutch contract – the European benchmark – fell 6.9% to 163 euros per megawatt hour. It is noted that last week it rose 19%.

Canada’s move brings relief to Germany and wider Europe as significantly reduced flows through the Nord Stream pipeline threaten the region’s plan to fill storage in time for winter.

The Kremlin said last week that the turbine would help boost shipments to Europe. Gazprom has been operating the pipeline at just 40 percent capacity since last month after the turbine was sent to Canada for maintenance and not returned due to sanctions against Russia. Berlin urged that it be sent back to ease the supply crisis.

The test will take place next week, when the pipeline’s annual maintenance work, which began on Monday, will be completed. Germany, for its part, has expressed concerns about whether supplies will continue after the end of pipeline maintenance. Gazprom needs six large turbines to operate the pipeline at full capacity, but not all of the components still in Russia are operational because they need maintenance, the company said.

The Canadian government issued a “time-limited and revocable” license to exempt the turbine from sanctions on Russia’s oil and gas industry over its invasion of Ukraine, citing the need to help its ally Germany avoid an energy crisis.

Critical situation

The tightening of supply is fueling Europe’s worst energy crisis in decades, driving up bills and forcing industry to look for ways to save energy and utilities to stay operational. Analysts have warned that a prolonged cut in flows from Russia, and even more likely a complete supply cut, would derail stockpiling plans for the winter, when demand also peaks.

Should Russian natural gas supplies return to current levels after the maintenance of the Nord Stream pipeline, imports from the supplier would help ensure an 87% filling level of storage facilities, meaning an adequate level of storage for the winter, the BloombergNEF.

However, concerns about Russian supplies and the region’s ability to prepare for winter remain. French Finance Minister Bruno Le Maire said Europe must prepare for a complete shutdown of natural gas deliveries in retaliation for sanctions against Russia.