The gas prices in Europe could skyrocket after the suspension of the Nord Stream 2 pipeline project, a senior Russian official said on Tuesday.
Remarks from Dmitry Medvedev, Russia’s former president and now deputy chairperson of its Security Council, came after Germany on Tuesday halted the certification process of the Baltic Sea gas pipeline project after Moscow formally recognized two breakaway regions in eastern Ukraine.
Europe’s most divisive energy project, worth $11 billion, was finished in September, but has stood idle pending certification by Germany and the European Union. It was designed to double the flow of Russian gas directly to Germany.
The pipeline had been set to ease the pressure on European consumers facing record energy prices amid a wider post-pandemic cost of living crisis, and on governments that have already forked out billions to try to cushion the impact on consumers.
But on Tuesday the European benchmark gas price, currently the Dutch March contract, was up 9.8% at 78.95 euros per megawatt-hour (MWh) at 4:07 p.m. GMT, much like the price for the fourth quarter, when Nord Stream 2 had been expected to start.
Medvedev tried to rub salt in that wound.
“Welcome to the new world where Europeans will soon have to pay 2,000 euros ($2,270) per thousand cubic meters!” he tweeted – suggesting prices were set to double.
President Vladimir Putin did pledge, however, that Russia would not interrupt any of its existing gas supplies.
The Kremlin hoped the delay of Nord Stream 2 would be temporary, Interfax news agency reported, citing Kremlin spokesperson Dmitry Peskov.
Germany gets half its gas from Russia and had argued that Nord Stream 2 was primarily a commercial project to diversify energy supplies for Europe.
But despite the potential benefits, the pipeline had faced opposition within the European Union and from the United States on the grounds that it would increase Europe's energy dependence on Russia as well as denying transit fees to Ukraine, host to another Russian gas pipeline and making it more vulnerable to Russian invasion.
Economy Minister Robert Habeck said Germany's gas supply was secured even without Nord Stream 2. But he told journalists in Duesseldorf that prices were indeed likely to rise further in the short term.
The Russian state-owned gas giant Gazprom owns the entire pipeline but paid half the costs, with the rest shared by Shell, Austria's OMV, France's Engie and Germany's Uniper and Wintershall DEA.
OMV said it did not currently see a need for write-downs over Nord Stream 2 and had already started receiving a return on its financing.
The Federal Network Agency – which regulates Germany's electricity, gas, telecommunications, post and railway sectors – had suspended the certification process in November, saying Nord Stream 2 must register as a legal entity in Germany.
Analysts had expected it to pick up the procedure in mid-year after the operator did as requested.
