Russia’s Ex-President: Gas Prices to More Than Double after Nord Stream 2 Freeze

Russia’s former President Dmitry Medvedev has warned that gas prices will more than double after Germany announced a freeze on the Nord Stream 2 pipeline.

Medvedev said Tuesday that he expects Europeans will soon face a mammoth rise in natural gas prices in response.

Germany announced the freeze over Moscow’s provocative moves in eastern Ukraine.

Medvedev, who served a term as Russia’s president and is now deputy chairman of the Security Council, penned what could be seen as a semi-sarcastic post on Twitter after German Chancellor Olaf Scholz ordered a halt to the certification of the Nord Stream 2 gas pipeline.

“Welcome to the brave new world where Europeans are very soon going to pay €2,000 per 1,000 cubic meters [35,000 cubic feet] of natural gas!” Medvedev wrote in reaction to Scholz’s announcement of the certification freeze.

Spot natural gas prices listed on the Dutch TTF index were trading at 83.6 euros ($94.9) per megawatt-hour on Feb. 23, which works out to around 878 euros ($996.6) per thousand cubic meters.

They’d have to more than double to around 190 euros ($216) per megawatt-hour to hit Medvedev’s stark prediction.

European natural gas prices on the Dutch TTF exchange hit a record high of 180.7 euros ($205.1) per megawatt-hour on Dec. 21, 2021, or around 1893 euros ($2,149) per thousand cubic meters, suggesting Medvedev’s target may not be mere hyperbole.

By contrast, European Commission Vice President Margrethe Vestager said on Wednesday that she believes halting Nord Stream 2 certification would have no impact on prices.

“There is no gas in the Nord Stream 2 pipeline,” Vestager told a news conference.

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“What has been stopped is the approval of the Nord Stream 2 pipeline that it needs in order to get into operation, which means stopping the approval process can have no effect on gas prices.”

Scholz on Tuesday said that certification of the Nord Stream 2 gas pipeline connecting Germany and Russia has been put on hold.

The move came as Western countries rolled out a series of coordinated punitive measures in response to the Kremlin’s actions in Ukraine.

Russian President Vladimir Putin on Monday declared the separatist-controlled so-called Luhansk People’s Republic (LPR) and Donetsk People’s Republic (DPR) as “independent” states, while issuing a decree ordering Russian troops into the two regions, ostensibly as peacekeepers.

Western leaders have dismissed the claim that Russian forces are in Ukraine to help maintain peace, accusing Putin of staging a territorial grab and warning that he plans a deeper incursion into Ukraine—possibly laying siege to Kyiv, toppling its government, and imposing a Moscow-friendly regime.

The Kremlin has denied plans for an invasion, instead, framing its military moves as measures meant to protect ethnic Russians living in Ukraine.

Putin has accused Ukrainian forces and their proxies of “genocide” in eastern Ukraine, an explosive claim dismissed by Western officials and analysts as propaganda laying the groundwork for a major invasion.

Pro-Russian separatists have controlled parts of the Donetsk and Luhansk districts, collectively known as the Donbas, for around eight years, with the U.N. estimating around 14,000 people killed in the bitter conflict, including at least 3,400 civilians.

Scholz’s announcement of a halt to Nord Stream 2, which was finished in September but has remained idle since then pending certification by Germany and the European Union, suggests Berlin is serious about imposing tough costs on Moscow for its actions in Ukraine.

The German government has long resisted halting the controversial pipeline project despite pressure from the United States and other European countries to pull the plug.

Washington has argued for years that Nord Stream 2 posed security risks by increasing European dependency on Russian gas supplies and giving Moscow the ability to bypass Poland and Ukraine in gas deliveries to Western Europe.

The Nord Stream 2 pipeline is capable of transporting around 55 billion cubic meters of natural gas per year from Russia to Germany.

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By Nick R. Hamilton

Nick has a broad background in journalism, business, and technology. He covers news on cryptocurrency, traditional assets, and economic markets.

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