The Gazprom share price is rising and rising. In recent weeks, the share price of the world’s largest natural gas producer has risen sharply, driven by steadily increasing gas prices. However, according to the Kremlin, this development could stop or weaken the commissioning of Gazprom’s new Nord Stream 2 pipeline, of all things.
“An early start of Nord Stream 2 will balance the price parameters for natural gas in Europe – including on the spot market. This is obvious,” Kremlin spokesman Dmitry Peskov said in Moscow on Wednesday, according to agencies.
The price of 1,000 cubic meters of gas exceeded $900 on Wednesday, Interfax agency reported. Peskov denied that energy major Russia had anything to do with the current price rally. Russian energy experts blamed the situation on the world market for the price jumps. According to Peskov, this does not affect the cost of pipeline gas.
The demand is great…
“The customers of pipeline gas are not greatly affected by the fluctuations, because there the price is calculated according to a different formula,”
Peskov explained. Because of long-term supply contracts, Germany pays much less than the current world market price. The demand for gas in Europe is great, Peskov said. “Above all, it’s not clear what the winter will be like – and if it gets cold, then even more gas will be needed.”
It is unclear when the Baltic Sea pipeline, which has already been fully laid, will come on line. Experts expect that gas could flow through the first of two strings as early as October in some circumstances. Gazprom CEO Alexei Miller announced the completion of Nord Stream 2 last week.
In the future, the pipeline will supply 55 billion cubic meters of gas per year from Russia through the Baltic Sea to Germany. According to the operating company, this will be enough to supply 26 million households.
Even though the valuation of the Gazprom share with a P/E ratio of 4 and a KBV of 0.5 is of course still very favorable, from a chart perspective the price is really crying out for a correction. However, investors can remain on board, after all, the prospects for the commodity giant remain good. It would now be important to tighten the stop price again to secure profits, this time to 5.90 euros.