Gazprom announces halved gas supply to Europe due to turbine problems

Nord Stream 1, which transports Russian gas to Europe, only resumed supply last week. Russian gas company Gazprom announced on Monday (25th) that the gas supply will be cut in half due to problems with the turbines. As a result, natural gas prices have soared, and the market expects European gas prices to remain high for the next few years, a situation that will benefit U.S. natural gas producers. Barron's, the Financial Times reported that Gazprom said sanctions-related issues affecting another turbine would reduce Nord Stream 1's gas delivery. It is understood that starting this Wednesday (27th), the gas supply will be reduced to 33 million cubic meters per day, which is 20% of the normal value. At present, the gas supply of Beixi No. 1 is 40% of the normal value. European gas prices rose sharply, with Dutch TTF gas front-month futures surging 12% to $179 per MWh. U.S. natural futures also rose 5.2% to $8.73 per million British thermal units (BTU). After conversion, the price of natural gas in Europe is $52 per million BTU; a huge premium compared with the US quotation. The market is worried that Russia will continue to use natural gas against Europe. Natural gas futures prices for delivery to Europe in the summer of 2023 and 2024 are approaching all-time highs at EUR 134 and EUR 82 per MWh, respectively. For more than a decade, European gas offers have been mostly below EUR 40 per MWh.