Essential digital access to quality FT journalism on any device Complete digital access to quality FT journalism with expert analysis from industry leaders Complete digital access to quality analysis and expert insights complemented with our award-winning Weekend Print edition Terms & Conditions apply Discover all the plans currently available in your country See why over a million readers pay to read the Financial Times Countries now have abundant gas supplies but years of high costs led to a pervasive economic slowdown Europe is leaving behind the winter months with gas storage facilities brimming at all-time highs This abundance of gas has allowed wholesale market prices to tumble and home energy bills to drift down towards levels last seen before Russia’s full-scale invasion of Ukraine So after years in the grip of crippling costs for home heating and power is Europe’s energy crisis over Experts have cautioned that waning gas and electricity markets and falling bills belie a deeper economic hangover that could extend into the next decade head of gas analytics at the data provider ICIS “I would say that we’re managing the crisis But the wider economic picture has become its own beast.” For more than a decade before the Ukraine invasion of February 2022 Russian pipelines were Europe’s biggest single source of imported gas After Moscow’s attack these imports plunged by two-thirds from their peak in 2019 causing a market shock that forced wholesale prices to almost 10 times the pre-crisis level Today there are clear signs that the immediate gas supply crunch that first emerged in the after the pandemic – and escalated after Russia’s war on Ukraine – has begun to show signs of easing. Read moreEurope has emerged from its second winter without access to Russian supplies with gas stores at a record 59% full, according to the industry body Gas Infrastructure Europe, thanks to pipeline imports from Norway and seaborne cargoes from the US Gas stores will be 95% full by the start of September this year well above an EU target to fill their facilities to 90% by November This abundance of gas should mean that market prices will continue to fall Early forecasts suggest that Europe’s benchmark gas price may tumble to an average €28.32/MWh (£24.28/MWh) through the summer months from April to September down by more than 17% from the average in summer last year but still more than double the €11.58/MWh average recorded in the summer of 2019 benchmark prices are forecast to fall by more than a third from last summer to an average of €63.18/MWh between April and September The slump in Europe’s energy markets has already filtered through to homes. In the UK, the regulator Ofgem’s energy price cap, which sets the maximum price that suppliers can charge per unit of gas or electricity, fell by £238 to £1,690 for the typical annual dual-fuel bill earlier this week – its lowest for two years “But lower prices alone are not enough to articulate the end of the energy crisis,” according to Marzec-Manser “There’s a wider economic picture to consider.” The recent fall in market prices is in part due to the economic gloom caused by the energy crisis itself Rising energy bills have triggered inflation across major economies leading to a cost of living crisis that has slowed consumer demand for new products This in turn has reduced economic activity across Europe’s industrial heartlands and has kept a lid on gas demand from heavy industry Marzec-Manser expects industrial gas demand to remain 20% below pre-pandemic levels this year Free daily newsletterGet set for the working day – we'll point you to all the business news and analysis you need every morning “Even though gas is more affordable there is still a diminished demand for products due to the cost of living crisis which means industrial gas demand has not yet recovered,” he says A rebound in industrial demand would prevent gas prices from falling to pre-pandemic lows and serve to underline Europe’s growing reliance on more expensive sources of gas EU countries have typically replaced Russia gas imports with seaborne cargoes of liquified natural gas (LNG) triggering a wave of investments in new import terminals to provide the gas to fuel an economic recovery Clean energy advocates have urged governments to do more to replace Russian gas imports with homegrown renewable alternatives But Europe’s weaker market prices may be making it more difficult for clean energy developers to play their part in weaning economies off fossil fuels says many energy buyers have seized the opportunity to lock in lower energy costs by striking long-term deals for renewable energy supplies at discount rates based on the forward curve for wholesale electricity prices For many developers the cost of building renewable energy projects, including wind and solar farms, has surged amid supply chain inflation triggered by the energy crisis they are still being asked to sell the power they generate based on the weaker energy prices forecast for the years ahead The weaker market prices and higher supply chain costs also mean that government schemes to support investment in new power projects will become more expensive for the public purse “It’s created a cycle which will echo through for another decade,” he says The German government says it has agreed to nationalise the country’s biggest natural gas importer expanding state intervention in the industry to prevent an energy shortage resulting from Russia’s war in Ukraine The deal with Uniper builds on a rescue package agreed to in July and features a capital increase of €8 billion that Germany will finance the government will gain a 99 per cent stake in the energy supplier which until now was controlled by Finland-based Fortum The Finnish government has the largest stake in Fortum said the deal was necessary because of the significance that Uniper plays in the German gas market It still needs to be approved by the European Commission Uniper supplies about 40 per cent of all gas customers in Germany it bought about half of its gas from Russia The company’s losses have mounted as Russia has reduced natural gas supplies to European countries supporting Ukraine The cuts have contributed to high prices for the fuel needed to heat homes rationing and a recession as the weather turns cold Uniper has been forced to buy gas at far higher prices on the market to fulfil its supply contracts European countries have scrambled to counter the price spiral and prioritised securing their energy supplies for winter including by filling their natural gas storage Germany also moved to take control of three Russian-owned oil refineries before an embargo on Russian oil takes effect next year Habeck noted that Germany has managed to fill its gas storage facilities to over 90 per cent capacity in preparation for the winter heating season despite Russia halting gas deliveries through the Nord Stream 1 pipeline Wholesale prices for gas have almost halved since the summer we have coped quite well with the situation,” Habeck said the situation has become significantly more dramatic and significantly worse.” Gas prices are still at a historically high level Citing the importance of Uniper for the German gas market Habeck said the government had chosen to nationalise the company “to ensure security of supply for Germany” It is also holding onto plans for consumers to pay a gas surcharge Uniper supplies gas to some 200 municipal utility companies in Germany It also holds stakes in power plants in Germany German Finance Minister Christian Lindner made clear the government decision to nationalise Uniper was taken “in large part because of the enormous increase in economic risks there which would no longer have been borne privately” the German state will now be involved in the distribution and procurement of gas,” he said Lindner said he expected to see a normalisation of gas prices next year as Germany brings new liquefied natural gas terminals online “It won’t be as cheap as Russian pipeline gas anymore but not as expensive as we currently see that in the markets processing the big shortage,” he said “But we need to find a bridge to get to this normalised market too many businesses and jobs will be lost.” Fortum’s chief executive said the company’s divestment of Uniper was “the right step to take” “The role of gas in Europe has fundamentally changed since Russia attacked Ukraine and so has the outlook for a gas-heavy portfolio,” CEO Markus Rauramo said the Finnish minister responsible for government-controlled companies said in a news conference that the Uniper deal was “inevitable” so that Fortum’s losses could be limited and the Finnish state would no longer have to capitalise the troubled Espoo She made clear that the Finnish government wasn’t happy with the end result with Uniper but acknowledged that Wednesday’s deal was “the unfortunate fact” Finland would have to deal with “This agreement secures Fortum’s position and the (Finnish) state now has no need to capitalise the company no one can say this for sure,” Tuppurainen told reporters The Finnish government owns just over 50 per cent in Fortum that is deemed a crucial company for the Nordic country’s energy security Uniper shares were down by a third on the Frankfurt exchange on Wednesday his government announced that German authorities were taking control of three Russian-owned oil refineries to ensure energy security Two subsidiaries of Russian oil giant Rosneft are being put under the administration of the national network regulator Rosneft accounts for about 12 per cent of Germany’s oil-refining capacity importing oil worth several hundred million euros every month which said the trusteeship was initially due to last for six months The network regulator already was put in charge of Gazprom’s former German subsidiary in April a decision that the government said was necessary to bring “order to the conditions” at the company after the Kremlin-controlled parent company abruptly cut ties with the unit Environmentalists said the nationalisation of Uniper should prompt the government to steer the company away from fossil fuels “Uniper must say goodbye to coal and gas and become a relevant actor in the energy transition,” Olaf Bandt chairman of the German environmental group BUND View the discussion thread. The German government said Monday that a turbine at the centre of uncertainty about future gas deliveries through a major pipeline from Russia to Europe was only supposed to be installed in September underlining its insistence that there should be no technical obstacle to the gas flow Germany’s biggest importer of Russian gas said it had received a letter from Russia’s Gazprom claiming “force majeure” – events beyond its control – as the reason for past and current shortfalls in gas deliveries Gazprom reduced gas deliveries through the Nord Stream 1 pipeline to Germany by 60 per cent last month The state-owned gas company cited alleged technical problems involving equipment that partner Siemens Energy sent to Canada for overhaul and couldn’t be returned because of sanctions imposed over Russia’s invasion of Ukraine The Canadian government said over a week ago that it would allow the gas turbine that powers a compressor station to be delivered to Germany citing the “very significant hardship” that the German economy would suffer without a sufficient gas supply to keep industries running and to generate heat and electricity German politicians have dismissed Russia’s technical explanation for last month’s reduction in gas flowing through Nord Stream 1 saying the decision was a political gambit by the Kremlin to sow uncertainty and further push up energy prices “We don’t see technical reasons,” Economy Ministry spokeswoman Beate Baron told reporters in Berlin “Our information is that this turbine is a replacement turbine that was earmarked for use in September but we are doing everything to take away possible pretexts for the Russian side.” Nord Stream 1 shut down altogether for annual maintenance on July 11 German officials are concerned that Russia may not resume gas deliveries at all after the scheduled end of that work on Thursday and could cite an alleged technical reason not to do so Baron wouldn’t say where the turbine is at present but said no European Union permit is needed for its transport because it doesn’t fall under EU sanctions Gazprom has raised the turbine issue twice over recent days saying on Saturday that it had “formally approached” Siemens Energy to provide documents needed to transport the equipment back to Russia energy company Uniper said it had “received a letter from Gazprom Export in which the company claims force majeure retroactively for past and current shortfalls in gas deliveries “We consider this as unjustified and have formally rejected the force majeure claim,” Uniper said in an emailed response to a query It wasn’t immediately clear what the move would mean for future gas deliveries Uniper – Germany’s biggest importer of Russian gas – asked the German government for a bailout to cope with surging gas prices Uniper said in a separate statement Monday that it was now fully using an existing €2 billion credit facility from Germany’s state-owned KfW development bank and applied to increase that facility View the discussion thread.