Gaps in EU's Preparation for Potential Gas Crises

Pipes at the landfall facilities of the 'Nord Stream 1' gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke
Pipes at the landfall facilities of the 'Nord Stream 1' gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke
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Gaps in EU's Preparation for Potential Gas Crises

Pipes at the landfall facilities of the 'Nord Stream 1' gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke
Pipes at the landfall facilities of the 'Nord Stream 1' gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke

The European Union is insufficiently prepared to weather a future gas crisis despite introducing a raft of measures to end its dependence on Russian energy, the European Court of Auditors said on Monday.

Europe's energy supply was upended in 2022 when former top gas supplier Russia invaded Ukraine and slashed fuel deliveries, prompting the EU to introduce emergency policies to fill gas storage, reduce gas use, and jointly buy gas, Reuters reported.

Europe managed to avoid a major gas shortage during the crisis, but it is unclear how much of that can be credited to EU policies versus other factors like mild winter weather and high prices causing industries to use less gas, the ECA said in a report on Monday.

Coordination between Brussels and EU countries helped to forge new gas supply routes to avoid shortages, and the EU's obligation for countries to fill gas storage 90% ahead of winter created market certainty, the report said.

But the auditors said these actions did not sufficiently address the affordability of gas, the price of which surged to above 300 euros ($322) per megawatt hour in August 2022 from around 50 euros per MWh a year prior.

"The Commission knew already in 2014 that a cut-off of Russian gas would have a huge impact on prices, but never modelled its effects on consumers or industry," said Joao Leao, who led the audit.

The auditors flagged other gaps in Europe's preparations for supply crises, noting that six EU countries have kept the option to cut off gas deliveries to their neighbours in an emergency.

They declined to comment on how the scheduled expiry this year of a deal on the transit of Russian gas to Europe via Ukraine would affect Europe's energy security. But they noted the EU's overall reliance on Russia has dropped from 45% of total gas supplies in 2021 to around 15% last year.

Europe's gas demand is expected to decrease as countries reduce fossil fuel consumption to meet climate goals. The auditors said the EU is far behind on its plans to build carbon capture infrastructure to capture the emissions from continued gas combustion.



Gold Prices Climb on Safe-Haven Demand; US Payrolls Data in Focus

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)
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Gold Prices Climb on Safe-Haven Demand; US Payrolls Data in Focus

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)

Gold prices climbed on Friday, supported by safe-haven demand arising from the Middle East conflict, while spotlight shifted towards US payrolls report to gauge the trajectory of the Federal Reserve's policy path.
Spot gold was up 0.3% at $2,662.50 per ounce, as of 0325 GMT, after climbing to an all-time high of $2,685.42 on Sept. 26. Bullion has gained 0.2 for the week.
US gold futures edged 0.1% higher to $2,682.10.
The dollar eased 0.1%, pulling back from over a one-month high, making greenback-priced bullion less expensive for other currency holders, reported Reuters.
Geopolitical tensions, particularly concerning Israel and Iran, are supporting gold prices and unless these risks subside, prices are likely to remain near record levels, said Ajay Kedia, director at Kedia Commodities, Mumbai.
The US is discussing strikes on Iran's oil facilities as retaliation for Tehran's missile attack on Israel, President Joe Biden said, while Israel's military hit Beirut with new air strikes in its battle against Lebanese armed group Hezbollah.
Bullion is considered a safe investment during times of political and financial uncertainty, and thrives in a low-rate environment.
The US nonfarm payroll data is due at 1230 GMT. New York Fed President John Williams and Chicago Fed President Austan are also scheduled to speak later in the day.
If the NFP report comes in strong, it will be positive for the dollar and then gold prices will see some profit-booking, Kedia added.
Traders see a 69% chance of a 25-basis-point Fed rate cut in November, according to CME FedWatch Tool.
BMI said in a note it expects gold prices to trade within the range of $2,500 to $2,800 in the coming months.
Spot silver rose 0.4% to $32.17 per ounce and has gained about 1.8% so far this week.
Platinum climbed 1.1% to $1,001.79 and palladium advanced 1.4% to $1,013.46.