Europe agrees compromise gas curbs as Russia squeezes supply

Model of pure gas pipeline, EU and Russia flags, July 18, 2022. REUTERS/Dado Ruvic/Illustration

BRUSSELS, July 26 (Reuters) – European Union international locations accepted a weakened emergency plan to curb their gas demand on Tuesday, after hanging compromise offers to restrict the cuts for some international locations, as they brace for additional Russian reductions in supply.

Europe faces an elevated gas squeeze from Wednesday, when Russian’s Gazprom (GAZP.MM) has stated it will lower flows by the Nord Stream 1 pipeline to Germany to a fifth of capability. learn extra

With a dozen EU international locations already going through decreased Russian provides, Brussels is urging member states to avoid wasting gas and retailer it for winter for concern Russia will utterly lower off flows in retaliation for Western sanctions over its conflict with Ukraine.

Energy ministers accepted a proposal for all EU international locations to voluntarily lower gas use by 15% from August to March.

The cuts could possibly be made binding in a supply emergency, however international locations agreed to exempt quite a few international locations and industries, after some governments had resisted the EU’s unique proposal to impose a binding 15% lower on each nation. learn extra

German Economy Minister Robert Habeck stated the settlement would present Russian President Vladimir Putin that Europe remained united within the face of Moscow’s newest gas cuts.

“You will not split us,” Habeck stated.

Hungary was the one nation that opposed the deal, two EU officers stated.

Russia’s Gazprom has blamed its newest discount on needing to halt the operation of a turbine – a motive dismissed by EU power chief Kadri Simson, who referred to as the transfer “politically motivated”.

Russia, which equipped 40% of EU gas earlier than it invaded Ukraine, has stated it’s a dependable power provider.

It additionally says the invasion, begun on Feb. 24, is a “special military operation”.

BINDING VERSUS EXEMPTIONS

The EU deal would exempt from the binding 15% gas lower international locations such as Ireland and Malta that aren’t related to different EU international locations’ gas networks.

News of the newest discount to Russian supply has pushed gas costs increased, including to the price of filling storage, whereas creating incentives to make use of much less.

Early on Tuesday, the benchmark front-month Dutch contract rose nearly 10% and is greater than 450% increased than a 12 months in the past, though down from file highs touched shortly after Russia started its invasion of Ukraine.

Countries that meet an EU goal for filling gas storage by August might face weaker targets – softening the cuts for roughly a dozen states, together with Germany and Italy, based mostly on present storage ranges.

They may also exempt the gas they use in essential industries, such as energy-intensive steelmaking, from the goal.

In addition, these with a restricted abilty to export gas to different EU international locations can request a decrease goal, offered they export what they will. That might embrace Spain, which doesn’t depend on Russian gas, and has stated slicing its personal demand wouldn’t assist different international locations because it lacks infrastructure capability to share spare gasoline.

“Everyone understands that when someone asks for help, you have to help. Help can be in different ways, but I believe that the spirit of collaboration will prevail,” Spanish Energy Minister Teresa Ribera stated on Tuesday.

The EU plan has examined international locations’ solidarity, with Greece and Poland among the many international locations against necessary gas cuts. learn extra

Polish Climate Minister Anna Moskwa stated the deal would impose no constraints on Poland’s gas use, and opposed the concept a rustic ought to curb its industrial gas use to assist different states going through shortages.

Some EU diplomats raised considerations that the variety of opt-outs within the ultimate regulation might imply it fails to make sure international locations save sufficient gas for winter.

Although governments together with Germany, Europe’s greatest gas person, have upped their power saving measures, EU international locations have decreased their mixed gas use by solely 5%, regardless of months of hovering costs and dwindling Russian provides.

“Fifteen percent will probably not be enough given what the Russians have just announced,” Irish Environment Minister Eamon Ryan stated.

The deal requires backing from a majority of nations to set off the binding gas cuts, after many opposed the Commission’s unique proposal that it have the ultimate say.

Reporting by Kate Abnett, Philip Blenkinsop, Robin Emmott, Marine Strauss, Gabriela Baczynska; Editing by Philip Blenkinsop, Matthew Lewis and Barbara Lewis

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