Pipes from the Nord Stream 1 gas pipeline’s onshore facilities are shown in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke/
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BERLIN/FRANKFURT, July 27 (Reuters) – Russia delivered less gas to Europe on Wednesday in a further escalation of the energy standoff between Moscow and the European Union that will make it harder and more expensive for the bloc to fill storage . before the winter heating season.
The supply cut, flagged by Gazprom ( GAZP.MM ) earlier this week, has reduced the capacity of the Nord Stream 1 pipeline, the main delivery route to Europe for Russian gas, to just a fifth of its capacity total
On Tuesday, EU countries approved a weakened emergency plan to curb gas demand after reaching compromise deals to limit cuts in some countries, with hopes that lower consumption will ease the impact on if Moscow cuts off the supply completely. Read more
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The plan highlights fears that countries may not be able to meet targets to replenish storage and keep their citizens warm during the winter months and that Europe’s fragile economic growth could take another hit if it has to ration the gas Read more
Analysts at the Royal Bank of Canada said the plan could help Europe get through the winter as long as Russian gas flows are at 20-50% of capacity, but warned against “market complacency, the European politicians have now solved the problem of dependence on Russian gas.”
While Moscow has blamed various technical problems for the supply cuts, Brussels has accused Russia of using energy as a weapon to blackmail the bloc and retaliate against Western sanctions over its invasion of Ukraine.
Kremlin spokesman Dmitry Peskov said Gazprom was supplying as much gas as possible to Europe, adding that technical equipment problems caused by sanctions prevented it from exporting more. Read more
“SAVE GAS”
On Wednesday, physical flows through Nord Stream 1 fell to 14.4 million kilowatt hours per hour (kWh/h) between 09:00 and 11:00 GMT from around 28 million kWh/ha day before, only 40% of normal capacity. The drop comes less than a week after the pipeline was restarted following a scheduled 10-day maintenance period.
European politicians have repeatedly warned that Russia could completely halt gas flows this winter, pushing Germany into recession and further raising prices for consumers and industry.
The wholesale price of Dutch gas for August, the European benchmark, rose 9% on Wednesday to 205 euros per megawatt hour, up 412% from a year ago.
Klaus Mueller, head of Germany’s grid regulator, said the country could still avoid a gas shortage that would lead to rationing.
Germany, Europe’s biggest economy and its biggest importer of Russian gas, has been particularly hard hit by supply cuts since mid-June, with its gas importer Uniper ( UN01.DE ) requiring a state bailout of 15 billion euros ($15.21 billion).
Italy’s Uniper and Eni ( ENI.MI ) said they received less gas from Gazprom than in recent days.
Mueller made another plea to households and industry to conserve gas and avoid rationing.
“The biggest thing is to save gas,” Mueller said. “I would like to hear less complaints, but reports (from industries that say) we as a sector are contributing to this,” he told broadcaster Deutschlandfunk.
German industry groups, however, warned that companies may have no choice but to cut output to achieve greater savings, pointing to slow approval to switch from natural gas to other, more polluting fuels. Read more
Mercedes-Benz ( MBGn.DE ) Chief Executive Ola Kaellenius said a mix of efficiency measures, increased electricity consumption, lower temperatures at production facilities and a switch to oil could reduce gas consumption by up to 50% during the year, if necessary.
Germany is currently in phase 2 of a three-stage emergency gas plan, with the final phase to begin when rationing can no longer be avoided.
“If you ask me if (gas shortages) are imminent, I would say if flows stay at 20% and if we can still add storage facilities in the coming days and weeks, then we still don’t have control physics. the gas shortage, which would be the prerequisite for Phase 3,” Mueller said.
($1 = 0.9862 euros)
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Written by Christoph Steitz and Nina Chestney; edited by Rachel More, Maria Sheahan, Elaine Hardcastle and Tomasz Janowski
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