PARIS—European producers are bracing for a possible curb on natural gas that would force them to halt production amid concerns that Russia is about to cut gas supplies through its main artery to Europe.
On Monday, the Nord Stream pipeline, which runs 760 miles from northwestern Russia under the Baltic Sea to Germany, will undergo 10 days of annual maintenance, repairs that are routine in peacetime. European officials say Moscow, which has already cut gas supplies to 40 percent of the pipeline’s capacity, may not bring it back.
The Kremlin says it plans to continue supplying gas through the pipeline after maintenance is completed and that any disruptions are the fault of Western sanctions, which it says have blocked the supply of a turbine for the pipeline, which is being repaired in Canada. But European capitals say Moscow is using gas supplies as a weapon, cutting pipeline supplies last month in retaliation for their support for Ukraine.
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On Saturday, Canada said it would ship the turbine to Germany after weeks of discussions with the German government. Berlin wants to return it to Russia, saying the move would show Moscow used the turbine as an excuse for a political decision to cut gas supplies to Europe.
Europe has enough gas for now, but producers in the region are preparing for a winter without Russian supplies. Some in need of chemicals for production made with natural gas are looking to import them from regions outside Europe where the fuel is more abundant. Others plan to switch from natural gas to other fuels where they can. And some manufacturers fear they will have no choice but to shut down altogether.
“There are no easy solutions if we find ourselves in a curtailment situation,” said Svein Tore Holsetter, CEO of Yara International AS A, the world’s largest fertilizer producer.
Europe was counting on Russian gas to be stockpiled for the winter when consumption peaks. Without Russian supplies, officials fear shortages could emerge as temperatures drop. Since Russia invaded Ukraine in February, Europe has been buying record amounts of liquefied natural gas from the U.S. and other non-Russian exporters, but those supplies may not be enough to replace Russian gas, which last year accounted for 40 percent of the European Union’s overall supplies fuel supply.
Russian President Vladimir Putin on Friday warned the West against imposing further measures against Moscow.
Onshore facility of the Nord Stream natural gas pipeline in Lubmin, Germany.
Photo: HANNIBAL HANSCHKE/REUTERS
“Sanction restrictions against Russia do much more damage precisely to those countries that impose them,” Mr Putin told a government meeting. “Further use of the policy of sanctions may lead to even more severe, even catastrophic consequences on the world energy market.
Uniper SE, one of Europe’s biggest energy companies, on Friday asked for a bailout from the German government after being hit hard by falling gas supplies from Russia. Uniper, which is Germany’s largest importer of Russian gas, had to make up the difference on the spot market by paying higher prices for this gas. Meanwhile, France is moving to nationalize energy giant EDF SA, which is losing billions of euros due to a government-imposed cap on electricity prices.
The continent’s energy-intensive industries are discussing with governments whether they can cut gas consumption to preserve scarce supplies for households when winter hits.
Yara, which has 15 production sites across Europe, uses natural gas to produce ammonia, the key ingredient in nitrogen fertilizers. In the first week of July, Yara was running its ammonia operations near full production, but Mr. Holsether said the company could scale back and import ammonia from its other sites in markets around the world where natural gas is more abundant. The company has taken this step several times in the past year as it faced spikes in natural gas prices in Europe. There are limits to the company’s flexibility, Mr. Holsetter said.
“Ammonia assets are not really designed to go up and down with price fluctuations,” he said.
German manufacturers, the engine of European industry, are rushing to prepare for a possible shutdown of the Russian market.
Hamburg-based Aurubis AG, one of Europe’s biggest copper producers, has said it is looking to replace gas with electricity and oil. However, gas remains the key fuel for many of the processes and cannot be replaced in the short term, including for some of the work at the Hamburg smelter, where more than 2,000 workers produce wires, cathodes and precious metals.
The transition to alternative energy sources was further complicated by disruptions in the global supply chain. Aurubis estimates that the change could take up to a year.
The German company Ritzenhoff AG operates in one of the most energy-intensive industries in the world: glass production. Most of the energy consumed in glass production comes from burning natural gas used to heat furnaces for melting raw materials and forming glass. The gas keeps what Axel Drosser, the chief executive, describes as a “glass soup” boiling in tanks at more than 2,700 degrees Fahrenheit.
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“Natural gas cannot be replaced here. If there is no gas, the ovens have to be shut down and production stops,” he said. In the event of a production shutdown, tanks may be damaged if left empty.
Mr. Drösser said the company, which sells its goods in more than 100 countries, is trying to reduce gas consumption, including by using a little hydrogen. “However, ad hoc substitution of gas in glass production is not possible with the given infrastructure,” he said.
Looking at a winter without Russian gas, Ritzenhoff developed two scenarios: a “hold operation,” in which production stops but a minimal amount of glass is still kept liquid to preserve tanks, and a total shutdown.
Coatinc Company Holding GmbH, one of the oldest family businesses in Germany at over 500 years old, provides an extremely important service for many steel-using industries: galvanizing, or immersing the steel in molten zinc in huge boilers, to prevent corrosion. In order to melt zinc, it is 90% dependent on gas.
While Coatinc aims to go electric in the longer term, it will take several years and an investment of around 16 million euros, which equates to $16.4 million.
As Europe races to wean itself off Russian energy, U.S. natural gas producers are struggling to meet demand and prices are rising. Factors including extreme weather conditions and equipment needs created a bottleneck amid the war in Ukraine. Illustration: Laura Kamerman and Sharon Shea
But if the gas goes out this winter, so will the company’s production. In that case, Paul Niederstein, the executive manager, hopes to have two weeks’ notice so the company can pump about 7,000 tons of liquid zinc from the boilers, cool it and store it.
Mr Niederstein said he was now trying to convince German authorities, who would decide who would get gas in the event of rationing, that his industry was critical and should be given priority.
“Galvanized steel is used to build solar fields and other renewable energy infrastructure,” he said. “We don’t make chocolate here.”
Some companies that planned to use gas instead of oil or coal as part of their plans to reduce carbon dioxide emissions are now pulling back because of the looming gas shortage.
Volkswagen AG operates two coal-fired power plants at its headquarters in Wolfsburg, Germany, which provide heat and power for the headquarters and the city. In 2018, VW said it would invest 400 million euros to switch to gas, saving 1.5 million metric tons a year in CO2 emissions.
The shift was expected to be completed by the end of this year. But following Russia’s invasion of Ukraine and the ensuing gas supply crisis, VW CEO Herbert Diess said the company could extend its use of…
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