Russia started sending gas through its biggest pipeline to Europe after a 10-day maintenance period.
Flows via the Nord Stream link connecting Russia to Germany restarted on Thursday, a spokesperson for the pipeline operator said by phone. Restoring flows to the levels requested will take some time. Gazprom declined to comment, Bloomberg reported.
The resumption of flows is set to provide some relief for the continent that’s racing to store the fuel before the winter.
Orders for gas shipment signal exports via the pipeline will resume at 40 per cent of capacity, the same level prior to the maintenance.
Moscow has been curbing gas shipments to Europe for months, but the continent still relies on the little it’s getting to fill the retired salt caverns, aquifers and fuel depots that hold its fuel inventories.
Without Russian gas, Europe is unlikely to have enough supply to warm homes and keep the lights on throughout the winter. The risk is massive economic damage.
Policy makers were preparing for the worst, with the European Union on Wednesday unveiling a plan to try to curb gas consumption by 15 percent. Budget Commissioner Johannes Hahn even said he didn’t expect the pipeline to come back.
“If flows resume and broadly in line with nominations, I would expect some short-term pressure on prices,” said Warren Patterson, head of commodities strategy for Dutch bank ING Groep NV. “But obviously there is still plenty of uncertainty over how flows will evolve in the coming weeks and months, so the market will still have to price in a fairly large risk premium.”
Flows at the 40 per cent level could send prices tumbling, according to Goldman Sachs Group Inc.
“The large number of clients that have expected the pipeline to remain at zero post maintenance suggests a sell-off in European gas prices from current levels is likely,” analysts including Samantha Dart said in a report.
Russian President Vladimir Putin has indicated that flows could fall to 20 percent as soon as next week. Only two turbines at a compressor station in Russia, which feeds the pipeline, are currently working and one of them needs to go for maintenance this month.
Flows could drop unless a replacement component sent from Canada, following sanctions-related delays, arrives in Russia soon.
Many have argued that Russia has more leverage if it keeps Europe guessing.
“Sending flows, but at capped levels, runs in Russia’s favor,” Tim Partridge, head of energy trading at DB Group Europe, said in a report on Wednesday. “It allows the Kremlin to continue to use the pipeline as a way of increasing volatility, while still reaping immense profits on inflated energy prices.”
European gas prices have surged over the past year, climbing to a record shortly after the start of the Russia-Ukraine war.
While prices have eased since then, they are still nine times higher than the average of the past five years, boosting costs for consumers already contending with higher prices of everything from food to fuel.
Concerns about gas shortages have already spread to every market, knocking the euro to trade around parity with the dollar.
A complete shutdown of Russian supplies will put Germany, Europe’s biggest economy, at the risk of losing almost 5 percent of its economic output, the International Monetary Fund warned.