Gas prices rose again amid growing tensions over Russian troops at the Ukrainian border and heightened uncertainty over the Nord Stream 2 pipeline.
Natural gas prices in Europe climbed to â¬ 115 per megawatt hour in Europe on Monday morning, with UK prices rising 12% above 300p per ther, while US benchmark prices rose 3.77% over the course of from the same window.
Prices hit record highs in October following supply shortages and problems at the pump, and a new recovery could now be underway as the diplomatic crisis between the United States, Russia and the rest of Europe is getting worse.
Last week, US Secretary of State Anthony Blinken called for the blockade of Nord Stream 2 if Russia invaded Ukraine, with the Kremlin having positioned more than 120,000 troops near its eastern border in the past month.
The Â£ 8.4 billion 759-mile pipeline has already been built, with initial supplies loaded into the tubes in October, but it is still awaiting certification from German regulators.
The process was delayed last month due to governance issues, with Gazprom-backed Nord Stream AG now on the verge of setting up a specific company to oversee the German gas pipeline area.
A decision is not expected until next year, and the verdict will then have to be approved by the European Commission.
Europe remains dependent on Russian gas
Washington previously agreed with Germany in July not to intervene in the pipeline, which it opposes, provided Russia does not use the new gas supply as a weapon.
Since then, there have been severe shortages of gas supplied to Europe, with warnings of potential outages, disruptions on the Yamal-Europe pipeline, and criticism from the International Energy Agency that Russia was not providing enough gas.
There are also fears that Russia is trying to minimize Ukraine’s influence in Europe, with the new pipeline reducing the importance of pipes crossing Ukraine on which it depends for transit charges.
The Nord Stream 2 pipeline would effectively double Germany’s dependence on Russia, supplying 55 billion cubic meters through 759 miles of Baltic Sea pipelines.
Europe already depends for 35% of its natural gas supply on Russia.
Russian Prime Minister Vladimir Putin has previously called the criticisms “politically motivated blah” and blamed Europe’s woes on insufficient storage and poorly planned renewable energy plans.
Gazprom said it had honored all the contracts it had entered into.
During in-depth virtual talks last week, Putin reportedly asked Biden for assurances that Ukraine would not be added as a NATO member.
Biden has since stopped threatening boots on the ground if Russia invades Ukraine, but he warned of “economic consequences like you’ve never seen.”
This could include working with European leaders to introduce travel bans and asset freezes for Russian politicians, and reduce financial and banking ties with Russia.
EU countries join forces to strengthen storage
Along with the geopolitical chaos, the European Commission is expected to come up with a system for EU countries to jointly source gas to deal with soaring energy prices across the continent.
According to Reuters, details were shared in a document ahead of the annual European Council summit in Brussels starting this week.
Rising energy prices have left energy suppliers and customers at risk, as governments scramble to use subsidies and tax breaks to protect consumers from high bills.
This prompted calls for a European system of joint gas purchasing.
Reuters reports that the Commission will propose an update to the gas market rules to be released on Wednesday that would put such a system in place
At the COP26 climate conference in Glasgow, the EU reaffirmed its belief that the long-term solution to high fossil fuel prices is to switch to renewables.
However, the crisis is increasingly urgent with threats of blackouts this winter unless supply flows increase and more gas can be stored.