Nord Stream 2 Tensions Increase: Nord Stream 2 (2nd direct Russia to Germany pipeline) was mechanically complete in September, as detailed in our recent note, but no gas will be sent though until H2/22. The German energy regulator confirmed yesterday that the full certification of the Nord Stream 2 pipeline would not occur before July 2022. Although Gazprom continues to deliver on long term gas sales commitments, additional transit capacity has not been purchased via Ukraine and more recently volumes from Yamal via Poland have also declined. We expect political tensions around the Nord Stream 2 start-up to increase as US/EU consider economic sanctions on Russia with repercussions on EU gas supply, increasing UK/EU gas price volatility. LNG follows the money: We expect incremental LNG cargoes to be attracted to the UK/EU, with prices surging c.25% higher than Asian LNG prices. The US is exporting LNG at record levels (over 11bcf/d through November). This follows the start-up of facilities at Sabine Pass facility (6th train) and Calcasieu Pass LNG export facilities. Indeed with further LNG facilities expected to start through 2022, the US will have the largest LNG export capacity globally (over 11.4bcf/d), exceeding Australia (11.4bcf/d) and Qatar (10.3bcf/d). However increasing LNG supply is unlikely to moderate prices, with global trade in LNG expected grow c.21% by 2025 (by the IEA) driven by Asian demand. Hard to Fix Storage: Continued higher gas prices will make refilling UK/EU gas storage facilities next summer challenging (EU gas storage is already at multi-year lows). High gas prices this summer (c.90p/therm) meant storage was low going into winter (LNG continued to be exported to Asia). Into summer 2022, the situation could be more acute (forward curve mid-22 is even higher c.170p/therm). UK Dependence on Gas Imports to Increase: Until the early 2000s, the UK was self-sufficient in natural gas. UK North Sea production drove a ‘dash for gas’ with low prices spurring gas fired power generation replacing coal (reducing emission). However, as UK North Sea production continues to decline, reliance on imports is expected to grow from 50% in 2021 to 60% by 2026. This could be higher if an assumed decline in gas demand (driven by domestic gas use transitioning to different technologies) happens more slowly. The majority of gas imports are delivered via a pipeline from Norway; however, LNG has contributed c.40% over the past two years, increasing the connection to the global gas market and associated pricing volatility. UK Gas Producers Offer Leverage: We continue to highlight Serica Energy (SQZ.L, Buy, 280p/share), and, once onstream early 2022, IOG (IOG.L, Buy, 50p/share). The valuations increase 32% and 40% respectively using the current forward curve (FY22 - 209p/therm and FY23 - 104p/therm).