European gas futures surged to a record high Thursday after Germany said natural gas flows to Europe via Russia's Nord Stream 2 pipeline won't be made before July, according to Bloomberg.
Germany's federal network agency, Bundesnetzagentur, halted Nord Stream 2's certification process in mid-November. The regulator requested the Swiss-based operator of the pipeline, Russia's Gazprom PJSC, to set up a German subsidiary to comply with European regulations.
As soon as that happens, the certification process will resume. Speaking at a press conference, Bundesnetzagentur President Jochen Homann said, "a decision won't be made in the first half of 2022."
Following Homann's comments, the Dutch month-ahead gas, the European benchmark, soared to a new record high of 135 euros, up more than 650% year on year.
The Nord Stream 2 was completed in September and is supposed to come online in early 2021, but that appears not the case anymore. Europe is dealing with winter supply concerns as the state of gas storage stocks dwindles.
Russian gas flows via the Yamal-Europe pipeline that runs across Belarus and Poland to Mallnow, Germany continue to run at depressed levels -- another reason for elevated gas prices.
We must point out the region's low stockpiles, depressed gas flows into the country, geopolitical concerns, and cold weather will likely bid gas prices throughout the Northern Hemisphere winter. However, the situation in the US is entirely the opposite -- warm weather and abundance of gas have depressed prices. European natural gas has never been more expensive relative to US prices.
While record-high prices are enough of a problem, for context, this is equivalent to a $270 price for a barrel of crude oil... strongly suggesting the pressure to switch must be building (and with it demand for crude, which could scupper Biden's cunning plan to lower US gasoline prices)...
Without the Nord Stream 2 flowing, power prices across the continent will continue to soar.
EUROPEAN ENERGY CRISIS: A map is worth a thousand words (and in case a few words are needed: that day-ahead electricity price is a record for Germany and much of the rest of Europe) | #EuropeanEnergyCrisis pic.twitter.com/m8SFhWoS6K— Javier Blas (@JavierBlas) December 15, 2021
Germany is shooting itself and the rest of Europe in the foot by not allowing the Nord Stream 2 to come online as winter is just five days away.