Russia cuts gas flows further as it urges Europe to save energy

FRANKFURT/LONDON (Reuters) – Russia delivered less gas to Europe on Wednesday in another escalation in the face of an energy crisis between Moscow and the European Union that will make it difficult for the European Union to fill up more expensive stocks. Before the winter heating season.

Cut off supplies, indicated by Gazprom (GAZP.MM) Earlier this week, it reduced the capacity of the Nord Stream 1 pipeline – the main delivery route to Europe for Russian gas – to 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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European Union countries agreed on Tuesday a weak contingency plan to curb gas demand after striking compromise deals to limit cuts in some countries, hoping that lower consumption would mitigate the impact if Moscow halted supplies altogether. Read more

The plan highlights concerns that countries will not be able to meet targets to refill storage and keep their citizens warm during the winter months and that Europe’s fragile economic growth could suffer another blow if gas rationing is to be made. Read more

Royal Bank of Canada analysts said the plan could help Europe get through the winter provided gas flows from Russia are within 20-50% of capacity, but cautioned against «market complacency, and European politicians have now resolved the issue of gas dependence.» Russian».

While Moscow has blamed delays in returning serviced turbines and sanctions for cutting supplies, Brussels has accused Russia of using energy as a weapon to blackmail the bloc and retaliate against Western sanctions for its invasion of Ukraine.

Gazprom Executive Vice President Vitaly Markelov said that the company has not yet received a Siemens turbine used at the Nord Stream 1 Portovaya compressor plant, which is undergoing maintenance in Canada. Read more

Markelov said there were sanctions risks associated with the machines, while Siemens Energy said Gazprom needed to provide customs documents to return the turbine to Russia.

save gas

On Wednesday, physical flows through Nord Stream 1 fell to 14.4 million kWh between 1200-1300 GMT from about 28 million kWh the day before, already just 40% of normal capacity. The drop comes less than a week after the pipeline was restarted after a scheduled 10-day maintenance period.

Pipes are photographed at the landing facilities of the Nord Stream 1 gas pipeline in Lubmen, Germany, March 8, 2022. REUTERS/Hannibal Hanschke/

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

The Netherlands’ wholesale gas price for August, the European benchmark, rose 7% to €210 per megawatt-hour on Wednesday, nearly 400% more than last year.

Germany, Europe’s largest economy and largest importer of Russian gas, has been hit particularly hard by supply cuts since mid-June, with its gas importer Uniper. (UN01.DE) As a result, it required a 15 billion euro ($15.21 billion) government bailout.

Environmental Transition Minister Roberto Cingolani has warned that Italy, another major importer that normally gets 40% of its gas from Russia, will face a gas supply crisis at the end of next winter if Russia halts supplies altogether. Read more

Uniper and Eni Italian (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 electricity shortages. Read more

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

Klaus Müller, head of the country’s grid regulator, said Germany can still avoid gas shortages that could push it to rationing, while making another appeal to homes and industry to «save gas».

However, German industry groups have warned that companies may have no choice but to cut production to achieve greater savings, citing slowing approval to replace 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, lower temperatures in production facilities and a switch to oil could cut gas use by up to 50% during the year, if needed.

Germany is currently in the second phase of its three-phase emergency gas plan, with the final phase starting once rationing can no longer be avoided.

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Additional reporting by Paul Carrell and Rachel Moore in Berlin, Christoph Stitz in Frankfurt and Nina Chestney in London; Additional reporting by Angelo Amanti in Rome and my Reuters offices; Editing by Eileen Hardcastle and Thomas Janowski

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