- The Nord Stream 1 pipeline has been shut down for repairs
- The pipeline is scheduled to resume pumping on Thursday
- The EU says countries must act now to reduce gas consumption
- Germany, others have rations and other plans
BRUSSELS/LONDON, July 20 (Reuters) – The European Union told member states on Wednesday to cut gas consumption by 15 percent by March as part of an emergency plan after President Vladimir Putin warned that Russian supplies sent in most the large pipeline to Europe, may be reduced further.
Supplies through the Nord Stream 1 pipeline, which accounts for more than a third of Russian gas exports to the EU, are due to resume on Thursday after a 10-day shutdown for annual maintenance.
But supplies on that route were cut even before the maintenance outage in the sanctioned parts dispute and could now be cut further, while flows on other routes, such as Ukraine, also fell after Russia invaded its neighbor in February.
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The outages have hampered Europe’s efforts to replenish gas supplies ahead of winter, raising the risk of rationing and another blow to fragile economic growth if Moscow further curbs flows in response to Western sanctions over the Ukraine war.
The European Commission has proposed a voluntary target for all EU countries to reduce gas use by 15% from August to March compared to their average consumption over the same period in 2016-2021.
“Russia is blackmailing us. Russia uses energy as a weapon. And therefore in any case, whether it is a partial, major shutdown of Russian gas or a complete shutdown of Russian gas, Europe must be ready,” European Commission President Ursula von der Leyen said.
The proposal would allow Brussels to make the target mandatory for emergency supplies if the EU declares a significant risk of severe gas shortages. Read more
The move, which needs the support of EU states, will be discussed on Friday so that ministers can approve it at an emergency meeting on July 26.
“We believe a total disruption is likely, and it is particularly likely if we do not act and leave ourselves vulnerable to it,” an EU official said. “If we wait, it will be more expensive and it will mean that we will be dancing to the tune of Russia.
EU countries are trying to ensure storage facilities are 80% full by November 1, up from around 65% now, the data showed. https://tmsnrt.rs/3RMqnZg
European politicians say Russia is using technical problems as a pretext to cut supplies. The Kremlin maintains that Russia remains a reliable energy supplier and has blamed sanctions for the reduced flows.
Two Russian sources familiar with Russia’s export plans said flows through Nord Stream 1 were expected to restart in time for Thursday after being halted on July 11 for annual maintenance.
But they said it would be below its capacity of 160 million cubic meters (mcm) per day.
Kremlin-controlled Gazprom ( GAZP.MM ) cut gas exports on the route to 40 percent capacity in June, blaming the delay on the return of a turbine that Siemens Energy ( ENR1n.DE ) was servicing in Canada.
ADDITIONAL DISCOUNTS
This week it was reported that that turbine, which had been covered by sanctions, was being returned, although Gazprom said on Wednesday that it had not received documentation for its reinstallation and said that the return of the turbine and maintenance of other equipment was necessary to to keep the pipeline running safely. Read more
Putin suggested there could be further cuts to supplies via the pipeline that runs under the Baltic Sea to Germany, Europe’s economic powerhouse that has relied heavily on Russian fuel, adding to concerns about European supplies. Read more
Gas prices have soared in choppy trade since the outbreak of the Ukraine crisis. The front-month gas contract rose above 160 euros per megawatt-hour (MWh) on Wednesday, up 360 percent from a year earlier, but below its March peak of 335 euros.
Rising prices squeezed utility companies, triggering bankruptcies. In Germany, the government plans to inject billions of euros into the country’s biggest buyer of Russian gas, Uniper ( UN01.DE ). Read more
Putin said Nord Stream 1 has five gas pumping units operated by Siemens Energy and another unit is out of order due to “disintegration of the inner lining”.
“There are two working machines there, they are pumping 60 million cubic meters a day… If one is not brought back, there will be one that is 30 million cubic meters. Does Gazprom have anything to do with this? he said.
Putin said another of the gas turbines was due to be sent for maintenance on July 26.
He also said that Gazprom, which has a monopoly on Russian gas exports via pipelines, was not to blame for the reduction in gas transit capacity through a network of pipelines to Europe.
He blamed Kyiv for closing one route through Ukraine, although Ukrainian authorities blamed the shutdown on Russia’s invasion.
Siemens Energy said maintaining the turbines for Nord Stream 1 would normally be a routine matter. He said he would continue to maintain equipment under sanctions if possible and when necessary and work as quickly as possible. Read more
Eastbound, Gazprom said on Wednesday that Russian gas deliveries to China via its Power of Siberia pipeline hit a new daily record. Moscow is expanding its supply capacity to China even as supplies to Europe are falling, even though Russia’s Far Eastern network is not connected to the European supply system.
Meanwhile, European nations are pursuing alternative supplies, even as the global gas market was stretched even before the Ukraine crisis, with demand for the fuel recovering from a pandemic-induced slump.
These efforts include seeking more gas from suppliers connected to Europe via pipeline, such as Algeria, and by building or expanding more liquefied natural gas (LNG) terminals to receive shipments from countries much further away, such as the United States.
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Reports from Reuters bureaus; Written by Edmund Blair; Editing by Carmel Crimmins
Our standards: The Thomson Reuters Trust Principles.
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