Russia cuts gas flows further as Europe urges energy saving

Pipes on the landfall services of the Nord Stream 1 gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke/

FRANKFURT/LONDON, July 27 (Reuters) – Russia delivered much less gas to Europe on Wednesday in a further escalation of an energy stand-off between Moscow and the European Union that can make it tougher, and costlier, for the bloc to refill storage forward of the winter heating season.

The lower in provides, flagged by Gazprom (GAZP.MM) earlier this week, has lowered the capability of Nord Stream 1 pipeline – the key supply path to Europe for Russian gas – to a mere fifth of its complete capability.

Nord Stream 1 accounts for round a 3rd of all Russian gas exports to Europe.

On Tuesday, EU nations authorised a weakened emergency plan to curb gas demand after putting compromise offers to restrict cuts for some nations, hoping decrease consumption will ease the impression in case Moscow stops provides altogether. learn extra

The plan highlights fears that nations might be unable to fulfill targets to refill storage and hold their residents heat through the winter months and that Europe’s fragile financial development could take one other hit if gas must be rationed. learn extra

Royal Bank of Canada analysts mentioned the plan may assist Europe get via the winter supplied gas flows from Russia are at 20-50% capability, however warned towards “complacency in the market European politicians have now solved the issue of Russian gas dependence.”

While Moscow has blamed the delayed return of a serviced turbine and sanctions for the provision cuts, Brussels has accused Russia of utilizing energy as a weapon to blackmail the bloc and retaliate for Western sanctions over its invasion of Ukraine.

Gazprom deputy CEO Vitaly Markelov mentioned the corporate has nonetheless not obtained a Siemens turbine used at Nord Stream 1’s Portovaya compressor station that has been present process servicing in Canada.

Markelov mentioned there have been sanctions dangers related to the equipment, whereas Siemens Energy mentioned Gazprom wanted to supply customs paperwork to convey the turbine again to Russia.

‘SAVE GAS’

On Wednesday, bodily flows by way of Nord Stream 1 tumbled to 14.4 million kilowatt hours per hour (kWh/h) between 1200-1300 GMT from round 28 million kWh/h a day earlier, already simply 40% of regular capability. The drop comes lower than per week after the pipeline restarted following a scheduled 10-day upkeep interval.

European politicians have repeatedly warned Russia may cease gas flows utterly this winter, which might thrust Germany into recession and ship costs for shoppers and trade hovering even further.

The Dutch wholesale gas value for August , the European benchmark, have been up 7% at 210 euros per megawatt hour on Wednesday, up round 400% from a yr in the past.

Germany, Europe’s prime economic system and its largest importer of Russian gas, has been significantly hit by provide cuts since mid-June, with its gas importer Uniper (UN01.DE) requiring a 15 billion euro ($15.21 billion) state bailout as a end result.

Italy, one other main importer that usually will get 40% of gas from Russia, would face a gas provide crunch on the finish of the approaching winter if Russia have been to completely halt provides, Ecological Transition Minister Roberto Cingolani warned. learn extra

Uniper and Italy’s Eni (ENI.MI) each mentioned they obtained much less gas from Gazprom than in current days.

German finance minister Christian Lindner mentioned he was open to using nuclear energy to keep away from an electrical energy scarcity. learn extra

Germany has mentioned it may lengthen the lifetime of its three remaining nuclear crops that produce 6% of its energy, if Russia have been to chop it off from its gas.

Klaus Mueller, head of the nation’s community regulator, mentioned Germany may nonetheless keep away from a gas scarcity that may immediate its rationing, whereas making one other plea to households and trade to “save gas”.

German trade teams, nevertheless, have warned corporations could haven’t any selection however lower manufacturing to realize greater financial savings, pointing to gradual approval for changing pure gas with different, extra polluting fuels. learn extra

Mercedes-Benz (MBGn.DE) chief government Ola Kaellenius mentioned a mix of effectivity measures, elevated electrical energy consumption, decreasing temperatures in manufacturing services and switching to grease may decrease gas use by as much as 50% inside the yr, if essential.

Germany is at the moment at Phase 2 of a three-stage emergency gas plan, with the ultimate section to kick in as soon as rationing can not be prevented.

($1 = 0.9862 euros)

Reporting by Paul Carrel and Rachel More in Berlin, Christoph Steitz in Frankfurt and Nina Chestney in London; further reporting by Angelo Amante in Rome and Reuters bureaux; modifying by Elaine Hardcastle and Tomasz Janowski

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