Two significant infrastructure outages put further pressure on Europe.

Here is Rystad Energy’s regular gas and LNG note from analyst Zongqiang Luo

These significant gas outages East and West of Europe are a reminder of the fragility of the physical infrastructure that underpins the global gas market.

TTF gas futures surged on 14 June with the contract prices of July and August settled at $29.6 per MMBtu and $30.126 per MMBtu respectively after Gazprom announced that the Nord Stream 1 supplies will be capped, and Freeport LNG facility is unlikely to return to normal operations until the end of the year.

The European gas market is once again going through a rough patch after Gazprom announced yesterday that a steep drop of about approximately 40% of gas supplies to Europe via Nord Stream 1 pipeline will be seen in the short term because of a turbine sent for maintenance to Siemens that has not been returned in due time.

It is a challenge for Siemens to send the turbine that was overhauled in Montreal, Canada back to Gazprom due to the imposed sanctions by Canada towards Russia.

There is uncertainty over how and when exactly Siemens will be able to return the turbine, encouragingly Siemens Energy has informed the Canadian and German governments about the situation and is seeking a possible solution.

As a result, the Nord Stream 1 flow had already declined to about 95 mcm/d on 14 June while the normal flow level shall be about 150 mcm/d.

This is a significant test of western governments resolve on sanctions, as well as Russia’s technical capacity to operate its sector facing with the risk of getting less support from western technologies and services.

While minor pieces of gas infrastructure can be more easily fixed, heavy, technically complex technology will require maintenance and servicing that currently would need cooperation with the west.

Gazprom has reported that only three of its eight turbines remain in operation at the pipeline’s Portovaya compressor station on Russia’s Baltic Sea coast, reducing the facility’s capacity to about 100 million cubic metres per day, against the nameplate capacity of 167 MMcmd.

Initially, when the blast in Freeport facility occurred, the facility and many market players expected that the Freeport LNG might only shut down for a period of three weeks while the latest announcement from Freeport facility state that a partial operation is targeted to be achieved in about 90 days once safety and security are assured.

Additionally, a full resumption of the facility LNG production is not expected till late 2022 until after the completion of all the necessary repairs.

With the extended shutdown of Freeport facility and concerns towards the export infrastructure capacity in short term, the Henry Hub gas price slumped to $7.189 per MMBtu on 14 June.

The Freeport facility provided Europe with 0.03 Billion cubic meters (Bcm) per day (or 1.2 Billion cubic feet (Bcf) per day) in May, roughly 2.5% of European demand.

Combined, these two outages are equivalent to 6.3% of European demand and the TTF had consequently jumped by 16% as a result.

Some further good news for the European gas market is that Norwegian gas may ease market pressure as Norwegian pipeline flows to Europe return to the level of 317 mcm/d after the planned yearly maintenance work for St.Fergus, Dunkerque and Emden over the past few weeks though some annual maintenance work have also been arranged for Kollsnes processing plant this week, reducing partially its daily gas output.

Still, this will make it a challenge for Europe to meet its storage target (achieve at the 80% minimum storage level by 1st November) this winter as the region is now losing supply from East and West, and the continent could be in for a winter season of sustained high prices as a result.

As the default options for European energy drop away to the East and West, the region will have to turn South to Africa and the Middle East for supplies, but the timeline for projects is likely to come too late for this winter.


Following Russia’s suspension of gas supplies to certain European countries and reduced gas supplies via several pipelines (Nord Stream 1, Sokhranivka, Sudzha etc.), Russian gas may be compelled to partially curtails production to match the increasingly limited options for gas delivery.

Though Gazprom earlier mentioned the expected drop in gas production to be approximately 4% for 2022, we currently expect the Russian gas production would decline to about 650 Bcm this year based on the lower pipeline exports to Europe in the second half of the year and decreased output from Gazprom ‘s Greenfields.

Additionally, Gazprom had set the storage target for the winter 2022 in early April to achieve a high level of 72.662 Bcm, which is almost the same level of winter 2021.

Due to less transparency on current Russian storage level, we estimate that the Russian domestic storage level is relatively high as Russia lacks the flexibility in domestic storage capacity or pipeline infrastructure to re-direct the volumes from Europe to Asia

If the capped supplies of Nord Stream 1 would last till the end of the year, we expect that the total Russian gas supplies to Europe in 2022 will in a range between 80 to 90 Bcm.


The Asian region is now closely monitoring European market movements to make the most of the summer season as the region shifts to seeking less imports when prices are higher and there are ample gas inventories.

Even though the full lifting of covid lockdown in Shanghai, Chinese gas consumption recovers in a slow pace.

Therefore, the JKM futures has maintained stable with prices of $23.175 per MMBtu on 14 June.

However, higher temperature forecasted for China, Japan and South Korea, will increase the gas need for power generation to meet the cooling demand in residential and commercial sectors in the coming days.