Russia further cuts gas flows as Europe pushes for energy savings

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

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FRANKFURT/LONDON, July 27 (Reuters) – Russia delivered less gas to Europe on Wednesday in a further escalation of an energy dispute between Moscow and the European Union, making it more difficult and expensive for the bloc to fill storage ahead of the winter heating season .

The supply cut, signaled by Gazprom (GAZP.MM) earlier this week, has reduced the capacity of the Nord Stream 1 pipeline – the main supply route to Europe for Russian gas – to just a fifth of its total capacity.

Nord Stream 1 accounts for about a third of all Russian gas exports to Europe.

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On Tuesday, EU countries approved a weakened contingency plan to curb gas demand after reaching compromises to limit austerity for some countries, in hopes that lower consumption will mitigate the impact in the event that Moscow halts supplies altogether. . read more

The plan highlights fears that countries will be unable to meet targets to fill storage capacity and keep their citizens warm during the winter months and that Europe’s fragile economic growth could take another hit if gas is to be rationed. read more

Analysts at the Royal Bank of Canada said the plan could help Europe get through the winter, provided gas flows from Russia have a 20-50% capacity, but warned of “market complacency European politicians now have the problem of Russian gas dependence solved”.

While Moscow blames the delayed return of a serviced turbine and sanctions for the supply restrictions, Brussels has accused Russia of using energy as a weapon to blackmail the bloc and retaliate against Western sanctions for the invasion of Ukraine.

Vitaly Markelov, deputy CEO of Gazprom, said the company has still not received a Siemens turbine used at Nord Stream 1’s compressor station in Portovaya, which is undergoing maintenance in Canada. read more

Markelov said sanctions were attached to the machines, while Siemens Energy said Gazprom would have to provide customs documents to return the turbine to Russia.

‘SAVE GAS’

On Wednesday, physical flows through Nord Stream 1 dropped to 14.4 million kilowatt-hours per hour (kWh/h) between 1200-1300 GMT from about 28 million kWh/ha a day earlier, already only 40% of normal capacity. The drop comes less than a week after the pipeline restarts after a scheduled 10-day maintenance window.

European politicians have repeatedly warned that Russia could completely shut down gas flows this winter, sending Germany into recession and pushing prices for consumers and industry even further.

The Dutch wholesale price for gas for August, the European benchmark, rose by 7% on Wednesday to 210 euros per megawatt hour, about 400% higher than a year ago.

Germany, the largest economy in Europe and the largest importer of Russian gas, has been particularly affected by austerity measures since mid-June, with the result that its gas importer Uniper (UN01.DE) needs a state aid of 15 billion euros ($15.21 billion). had.

Italy, another major importer that typically gets 40% of its gas from Russia, would face a gas shortage by the end of next winter if Russia were to stop deliveries altogether, Ecological Transition Minister Roberto Cingolani warned. read more

Uniper and Italy’s Eni (ENI.MI) both said they received less gas from Gazprom than in recent days.

German Finance Minister Christian Lindner said he is open to using nuclear power to avoid an electricity shortage. read more

Germany has said it could extend the life of its three remaining nuclear plants, which produce 6% of its energy, if Russia cut it off from its gas.

Klaus Mueller, head of the country’s network regulator, said Germany could still avoid a gas shortage that would lead to rationing, while making another plea to households and industry to “save gas”.

However, German industry groups have warned that companies may have no choice but to cut production to realize greater savings, pointing to slow adoption of replacing natural gas with other, more polluting fuels. read more

Mercedes-Benz (MBGn.DE) CEO Ola Kaellenius said a combination of efficiency measures, increased electricity consumption, lowering temperatures in production facilities and switching to oil could reduce gas consumption by as much as 50% within a year, if needed.

Germany is currently in phase 2 of a three-phase emergency gas plan, with the final phase commencing once rationing can no longer be avoided.

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Report by Paul Carrel and Rachel More in Berlin, Christoph Steitz in Frankfurt and Nina Chestney in London; additional reporting by Angelo Amante in Rome and Reuters offices; adaptation by Elaine Hardcastle and Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles.

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