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By Julie Fisher and Rob Dalton

LONDON (ICIS)–European gas prices are unlikely to see much downside from record highs reached on 22 August, with a barrage of bullish fundamental drivers continuing to impact markets into the first half of September.

Chief among these is the announcement made late on Friday of a three-day maintenance on Russia’s Nord Stream 1 pipeline at the end of August, which raised concerns that the pipe may be taken completely offline on a more permanent basis.

Russian producer Gazprom announced on 19 August that the Russia-Germany Nord Stream 1 pipeline would undergo three days of maintenance starting on 31 August, which would curtail all gas flows on the pipeline.

Gazprom stated in a Telegram post that its only remaining compressor, a Trent 60 gas compressor, would be shut down for maintenance, which would include inspections for any leaks, checking safety valves and the air flow system. Gazprom also said that gas flows would return to 33 million cubic metres (mcm)/day by the end of the maintenance period, in line with current flows.

Deliveries via Nord Stream have steadily decreased through the summer months due to issues with compressors at the Portovaya station.

Traders expressed concern that Nord Stream flows may not return from this latest maintenance, with one saying that “not being able to inject will add extra risk to the winter security of supply”.

Even if flows do return to pre-maintenance levels, the trader added that they “don’t expect prices [to come] down significantly as there are so many risks on the market”.

Russian deliveries via other transport routes have not ramped up to compensate the declining Nord Stream flows during the summer to date, and in fact exports from Germany to Poland at the Mallnow point have increased.

In the first two days of week 34, deliveries towards Poland at the point have averaged 20mcm/day, up from the previous week’s average of 12mcm/day.

Another significant bullish driver particularly to northern European gas markets is upstream maintenance in Norway.

Operator Gassco had stacked planned works heavily in late August and early September, and in the last few sessions unplanned outages have added to the capacity impact.

At present, close to 38mcm/day is offline in Norway, with almost 9mcm/day of this contributed by an unplanned outage at the Kvitebjorn field.

While the Kvitebjorn outage is expected to end on 27 August, maintenance will then ramp up in early September, with the impact peaking at just over 136mcm/day on 7 September. If Nord Stream does not return from the latest round of maintenance, this will leave systems very tight in the early part of September.

Above-average temperatures supporting cooling demand and low wind driving consumption of gas for power generation are also ongoing bullish drivers across much of Europe.

In France, for instance, temperatures above the seasonal norm are forecast until week 36, with below-average wind output expected until week 35.

Power markets have also been recently pricing in significant supply tightness arising from poor availability of generation sources outside of gas.

This includes a downwards revision in EDF’s nuclear fleet, poor hydro levels and hot and dry weather across the continent.

The German Cal ’23 contract, the European benchmark, has risen 70% since 1 August, while the equivalent French contract has risen nearly 65% over the same period and was last assessed by ICIS at €829.5/MWh.

This has resulted in many power producers having to hedge gas in an already particularly tight market with few alternatives, adding to bullish sentiment in the gas markets.

Additional reporting by ICIS Energy Editorial

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