In a further escalation of the energy standoff between Moscow and the European Union, Russia delivered less gas to Europe on Wednesday. This will make it more difficult and expensive for the bloc to fill up its storage facilities in time for the winter heating season.
Gas exports
The major Russian gas exports route to Europe, Nord Stream 1, has had its capacity cut to just a fifth of what it was before the supply cut, which was announced by Gazprom earlier this week.gas exports
About one-third of all Russian gas exported to Europe goes through Nord Stream 1.
After reaching compromise agreements to limit cuts for some countries, the EU countries approved a weak emergency plan to reduce gas demand on Tuesday, hoping that lower consumption will lessen the impact in some countries.gas exports
The plan highlights concerns that countries won’t be able to meet goals to restock storage and keep people warm during the winter and that Europe’s already fragile economic growth may suffer another setback if gas must be rationed.
However, they cautioned against “complacency in the market European politicians have now solved the issue of Russian gas dependence.” Royal Bank of Canada analysts said the plan could help Europe get through the winter provided gas flows from Russia are at 20 to 50 percent capacity.gas exports
Moscow has attributed the supply cuts to sanctions and the delayed return of a serviced turbine, but Brussels has charged Russia with using energy as a weapon to blackmail the EU and retaliate for Western sanctions over its invasion of Ukraine.gas exports
Moscow has attributed the supply cuts to sanctions and the delayed return of a serviced turbine, but Brussels has charged Russia with using energy as a weapon to blackmail the EU and retaliate for Western sanctions over its invasion of Ukraine.
A Siemens turbine used at the Portovaya compressor station of Nord Stream 1 that has been receiving maintenance in Canada, according to Vitaly Markelov, deputy CEO of Gazprom, has still not been delivered to the company.gas exports
Markelov claimed that the equipment posed a risk of being subject to sanctions, while Siemens Energy claimed that in order to bring the turbine back to Russia, Gazprom would need to present customs documentation.
Physical flows through Nord Stream 1 on Wednesday dropped to 14.4 million kilowatt hours per hour (kWh/h) between 1200 and 1300 GMT from about 28 million kWh/h the day before, which was already only 40% of the pipeline’s normal capacity. The decrease occurs less than a week after the pipeline was restarted following a 10-day maintenance window that was planned.
Russia could completely halt gas flows this winter, European politicians have repeatedly warned, which would send Germany into a recession and cause prices for consumers and industry to soar even higher.gas exports
The European benchmark Dutch wholesale gas price for August increased 7% on Wednesday to 210 euros per megawatt hour, a 400% increase from the previous year.
Since mid-June, supply disruptions have particularly affected Germany, Europe’s largest importer of Russian gas. As a result, Germany’s gas importer Uniper needed a 15 billion euro ($15.21 billion) state bailout.
Roberto Cingolani, the minister of ecological transition, warned that if Russia completely stopped supplying gas, Italy, another significant importer that typically receives 40% of its gas from Russia, would experience a shortage of gas at the end of the upcoming winter.
Both Uniper and Eni, an Italian company, claimed to have received less gas from Gazprom recently.
To prevent a shortage of electricity, German Finance Minister Christian Lindner said he was open to using nuclear power.
Germany has stated that if Russia were to cut off its gas supply, it could extend the life of its three remaining nuclear plants, which account for 6% of the country’s total electricity production.
In a new appeal to consumers and business to “save gas,” Germany’s network regulator, Klaus Mueller, said the country could still avoid a gas shortage that would force rationing.
German industry groups have cautioned, however, that due to slow approval for switching from natural gas to other, more polluting fuels, companies may be forced to reduce production in order to achieve greater savings.
Ola Kaellenius, CEO of Mercedes-Benz, claimed that a combination of efficiency measures, increased electricity consumption, lowered temperatures in manufacturing facilities, and switching to oil could reduce gas use by up to 50% within five years.
Phase 2 of a three-stage emergency gas plan is currently in effect in Germany; phase 3 will begin once rationing can no longer be avoided.
