UK gas prices break records as Europe’s energy crisis worsens

London, December 20 - Neftegaz.RU. UK gas prices surged to an all-time high of 350p per therm, up 520 % year-to-date amid soaring demand and continued supply concerns across the continent this winter, City A.M. has reported.
While prices dropped to 320p per therm on the UK Natural Gas Futures on Friday morning, the benchmark remains ahead of Asia’s LNG.

Nathan Piper, Head of oil & gas research at Investec anticipated that gas prices would remain high as economies recover from the pandemic.
He said:

• We believe there is a high likelihood of both prolonged and even higher prices through winter with after-effects that could stretch beyond the next two years

The soaring prices reflect current market conditions across Europe, and follow continued geopolitical uncertainty and rising tensions over the 759-mile Nord Stream 2 pipeline which would double Russian gas exports into Germany.
Earlier this week, the regulator announced that no decision on certifying the pipeline is expected in the 1^st half of next year.

Russia has been accused of putting pressure on Europe by reducing supplies into the continent, in order to get Nord Stream 2 approved, which could reduce Ukraine’s influence in the region.
President Vladimir Putin has dismissed these claims as politically motivated blather.

Investec believed these tensions would inevitably influence prices over winter – while the lack of Nord Stream 2 would continue to limit overall energy supplies.
Piper said:

• We expect political tensions around the Nord Stream 2 start-up will increase as US and EU consider economic sanctions on Russia with repercussions on EU gas supply, increasing UK and EU gas price volatility

The analyst also suggested the continued rising costs would make it more difficult for the UK and EU to refill supplies with both countries suffering from decisions to reduce storage capacity as part of the transition to renewable sources.

The UK reportedly can only store gas 7 days in advance since scrapping its largest rough storage site in Yokrshire.
He said:

• Continued higher gas prices will make refilling UK/EU gas storage facilities next summer challenging, and EU gas storage is already at multi-year lows
• High gas prices this summer meant storage was low going into winter, while LNG continued to be exported to Asia. Next summer, the situation could be more acute

Soaring wholesale gas prices have already contributed to 25 UK energy firms ceasing trading over the past 3 months, with over 4 million customers directly affected.