Wholesale gas prices have scaled "insane" levels that will ultimately hurt demand, although the lack of Russian gas means Europe's supply will be tight for several years, the chief executive of German oil firm Wintershall Dea said on Tuesday.
The benchmark European gas contract TRNLTTFMc1 has risen by more than 300% in a year and on Friday touched a record high of 343.08 euros per megawatt hour (MWh).
On Tuesday, it fell to 259 euros/MWh, as Europe almost reached its target of filling gas stores to 80% as a security policy ahead of the peak demand winter months, but prices remain well above normal levels.
"The prices we are having currently are insane. That is nothing even a gas producer is looking for because in the end, we are going to massively destroy demand for our product," Mario Mehren told reporters on the sidelines of an energy conference.
"Whoever has a chance to walk away from gas is walking away from gas and we don't know if they're coming back."
High prices have already cut fertilizer production in Europe and many other big users of gas are seeking ways to reduce consumption.
Mehren said the best way to stabilize prices was to show there is sufficient supply not just this winter, but also for the next winters.
"Because if you look into the Russian gas deliveries this year, yes, they are lower than last year, but they are not insignificant. And the big question mark is what is going to happen next year?" Mehren said.
Russian pipeline gas deliveries to Europe have fallen by some 75% this year and the Nord Stream 1 gas pipeline from Russia to Germany has been running at 20% of capacity. From Tuesday, supplies will be halted for three days of unscheduled maintenance.
Wintershall Dea holds a 15.5% stake in the Nord Stream 1 pipeline but it is not a gas importer and Mehren said he had no insight into the reduction in flows and the upcoming maintenance.
Despite lower Russian gas supply, German gas storage was "in good shape" this year, Mehren said. Storage sites were just over 83% full as of Aug. 28, close to a German target of 85% by Oct. 1.
Lower Russian supply has been partly offset by increased production from Norway this year.
(Reuters - Reporting by Nora Buli in Stavanger; editing by Gwladys Fouche and Barbara Lewis)