Gas Prices Soar as Indefinite Halt of Nord Stream 1 Kindles Winter Fears

View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline in Lubmin, Germany, Sunday, Sept. 4, 2022. (dpa via AP)
View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline in Lubmin, Germany, Sunday, Sept. 4, 2022. (dpa via AP)
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Gas Prices Soar as Indefinite Halt of Nord Stream 1 Kindles Winter Fears

View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline in Lubmin, Germany, Sunday, Sept. 4, 2022. (dpa via AP)
View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline in Lubmin, Germany, Sunday, Sept. 4, 2022. (dpa via AP)

Dutch and British wholesale gas prices soared on Monday morning, reversing most of a downward trend seen the previous week, after Russian gas deliveries to Germany via the Nord Stream 1 were suspended indefinitely over the weekend.

The British contract for day-ahead delivery sky-rocketed 200 pence, or 133% to 350 pence per therm by 0929 GMT, and the within-day contract gained 50 pence to 350 p/therm.

On the continent, the Dutch TTF day-ahead gas contract was up 54.52 euros, or 29% at 245 euros per megawatt hour (MWh).

Further out, Dutch gas for October, the European benchmark contract, gained 59 euros to 268 euros/MWh.

The British October contract was up 146 pence at 546 p/therm.

Prices reacted to a post-market close announcement on Friday from Russia's Gazprom that an oil leak in equipment of the Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany, meant it would stay shut beyond last week's three-day maintenance shutdown.

"Our TTF day-ahead price view today is for prices to pare last week's losses as Europe braces itself for no Russian gas for the foreseeable future and exacerbates fears of a winter supply crunch," Refinitiv analyst Wayne Bryan said in a morning report.

Fundamental drivers were taking a backseat, with Russian rhetoric not supporting a restart of flows via Nord Stream 1 anytime soon, he added.

The Kremlin has repeatedly blamed Western sanctions for the shutdown.

"The market should rise a lot Monday, but the question is for how much and how long, and to what extent the market had already priced this in," analysts at Energi Danmark said in a note.

Europe is losing close to 1 billion cubic meters of natural gas supply per month due to the loss of Nord Stream 1, Warren Patterson, head of commodities strategy at ING said.

The latest move also increased nervousness about flows via Ukraine as well as the TurkStream pipeline, going forward, he added.

"What is clear is that the more Russia reduces gas flows to Europe, the less leverage they have over Europe," Patterson said.

Analysts at Sweden's SEB bank said they maintained a Russian gas flow scenario of 10-20% of normal capacity during the winter.

"This would partly maximize Russian geo- and energy security political pressure on the EU, and partly provide Moscow with valuable income," they added.

Anticipating rising market volatility, Finland and Sweden reacted immediately over the weekend by promising liquidity guarantees to energy companies.

European gas storages were 81.55% full as of Sept. 3, according to Gas Infrastructure Europe data.

In the European carbon market, the benchmark contract was down 3.49 euros at 74.40 euros a ton.



Gulf Petrochemical Sector Faces Mounting Challenges Amid Global Shifts

A SABIC facility in Jilin, China (Company photo)
A SABIC facility in Jilin, China (Company photo)
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Gulf Petrochemical Sector Faces Mounting Challenges Amid Global Shifts

A SABIC facility in Jilin, China (Company photo)
A SABIC facility in Jilin, China (Company photo)

Over the past five years, the Gulf’s petrochemical industry has found itself at a critical juncture. A mix of rapid geopolitical developments, the lingering effects of the COVID-19 pandemic, and a slowdown in global economic growth, particularly in key markets like China and other parts of Asia, has disrupted longstanding business models and cast uncertainty over the future of the sector.

Industry experts and analysts, speaking to Asharq Al-Awsat, pointed to a convergence of four primary challenges facing Gulf petrochemical companies today. Among them are weak innovation strategies, limited domestic downstream capabilities, ongoing geopolitical volatility affecting supply chains, and increasingly stringent global environmental regulations on hydrocarbon-based products.

Fares Al-Qadheebi, an expert in international strategic partnerships and a member of the Saudi Economic Association, stressed that Gulf petrochemical firms must undergo a strategic transformation to remain viable.

He argued that the industry’s traditional reliance on government-subsidized feedstock is no longer sufficient in an evolving market landscape. For decades, these subsidies provided a competitive advantage. However, with subsidies gradually being phased out or restructured, companies now face mounting pressure to pivot toward higher-value, specialized products that align with strategic industries and evolving global demand.

The challenge, Al-Qadheebi said, lies in the sector’s historically low investment in research and development. Financial disclosures from several companies reflect limited R&D expenditure, resulting in a lag in innovation and product diversification. This hampers the ability of Gulf producers to shift from commodity chemicals to advanced materials that could drive future profitability.

At the same time, the region’s domestic manufacturing sector remains underdeveloped. Despite various industrial localization initiatives, Gulf countries continue to rely heavily on export markets, primarily China and India. This overreliance has left companies vulnerable to external shocks and market shifts, making it difficult to redirect surplus production into local value-added industries.

Geopolitical uncertainty is compounding the problem. Disruptions to global supply chains due to regional conflicts and shifting trade alliances have introduced logistical challenges and pricing volatility. This has forced some international buyers to seek alternative suppliers in more stable regions, undermining long-term relationships and jeopardizing the sector’s global competitiveness.

The rise of protectionist policies, particularly in the United States, has also led Gulf companies to reconsider their exposure to the American market and explore options such as relocating parts of their operations overseas.

Adding to the pressure are global environmental policies that increasingly target carbon-intensive products. Gulf producers are being pushed to develop low-emission technologies and environmentally compliant alternatives. While necessary, such changes significantly increase development and production costs and complicate market access.

Financial analyst Tareq Al-Atiq noted that these combined pressures have eroded profitability across much of the sector, with few signs of a swift recovery. He stressed the need for mergers, strategic alliances, and investments in carbon capture technologies to reduce operating costs and reposition the industry in growth markets, particularly in emerging economies with rising demand for plastics, fertilizers, and other petrochemical derivatives.

Looking ahead, experts suggest that the Gulf’s petrochemical giants must work more cohesively - potentially in an OPEC-style alliance - to coordinate production, innovation strategies, and market expansion efforts, or risk falling behind in an increasingly competitive global landscape.