Natural gas is flowing on the Nord Stream 2 (NS2) pipeline that runs from Russia to Germany, with volumes expected to ramp up as the system is commissioned.
Gazprom PJSC affiliate Nord Stream 2 AG this week said gas filling has started on the first string of the 5.3 Bcf/d, two-leg system that stretches 764 miles and connects the countries by undersea passage.
“The string will be gradually filled to build the required inventory and pressure as a prerequisite for the later technical tests,” the company said in a statement.
Last month, after the final section of the system was tied together, Gazprom said it would work toward starting commercial operations by the end of the year to move more supplies to natural gas-starved Europe.
Why Are Natural Gas Prices Still Rising?
Natural gas prices have continued an extraordinary rally on the continent this week despite NS2’s announcement. British and Dutch futures smashed through previous records on Tuesday, with the front-month contracts each settling around $40/MMBtu. Spot prices in Asia followed suit and also set records Tuesday, when the Japan-Korea Marker was assessed above $35/MMBtu.
NS2 is considered crucial to supplying Europe with additional natural gas, where inventories remain significantly below what’s needed as colder months near. The continent has competed with Asia for liquefied natural gas (LNG) imports throughout the year. Pipeline imports to Europe have also been weak amid unplanned outages and regular maintenance.
Gas flows from Norway dropped to their lowest point in 10 days on Tuesday, while pipeline flows from Russia through the Mallnow entry point in Germany were also weak, helping to further support prices.
The first string of NS2 has already undergone pre-commissioning work to ensure pipeline integrity, the company said. Internal inspections, along with external visual and instrumental surveys have been completed.
However, it remains unclear when the pipeline might actually enter commercial service as significant regulatory hurdles remain for the embattled system. Chief among them is the need for compliance with European Union rules requiring ownership of transmission assets and natural gas supplies to be separate. The rule could prove to be complicated for Gazprom’s integrated structure.
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