Russia’s Gazprom to make drastic cut to Europe’s gas supply from Wednesday

  • 7/25/2022
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The Russian state-controlled energy company Gazprom has announced a drastic cut to gas deliveries through its main pipeline to Europe from Wednesday. The Russian gas export monopoly said it was halting the operation of one of the last two operating turbines due to the “technical condition of the engine”, cutting daily gas deliveries via the Nord Stream pipeline to 33m cubic metres a day – about 20% of the pipeline’s capacity. “We are monitoring the situation very closely in close exchange with the federal network agency and the gas crisis team,” the German economy ministry said in a statement on Monday after Gazprom’s announcement. “According to our information, there is no technical reason for a reduction in deliveries.” The Nord Stream 1 pipeline resumed pumping last week, after a 10-day maintenance break, but the European Commission has warned that a complete gas shut down by Russia is likely. The announcement came as EU governments sparred over a plan for a 15% gas savings target intended to avoid a winter crisis if the Kremlin turns off the taps to Europe. The EU’s goal is to use less gas now to build storage for winter. The EU executive last week accused Moscow of using energy as a “weapon” and called on 27 member states to accept a voluntary 15% gas savings target, which could become mandatory if Brussels declares a supply emergency. EU officials had hoped the bloc’s 27 energy ministers meeting in Brussels on Tuesday would rubber stamp the 15% gas savings plan. Instead countries from all corners of Europe have raised objections, led by Spain and Portugal, who are relatively isolated from the EU’s gas pipeline network. The proposals have been seen as designed for Germany, which faces energy rationing as it scrambles to undo decades of dependence on Russian gas. In an echo of the bruising debates of the eurozone crisis ten years ago, where arguments raged over bailouts, debt and blame, southern countries suggested their citizens should not have to make sacrifices for the past policies of others. Spain’s deputy prime minister Teresa Ribera said last week her country was being asked to make a “disproportionate sacrifice”, as she pointed to investments her country had made on liquefied natural gas infrastructure, costs that had fallen on Spanish companies and consumers, she said. “Unlike other countries, we Spaniards have not lived beyond our means from an energy point of view,” Ribera said in unusually pointed comments. Advertisement Portugal was “totally against” the proposals its energy minister, João Galamba, told local media last week, saying they did not address the needs of Spain or Portugal, which have little gas interconnection with the rest of Europe. The Iberian countries are also using more gas to generate electricity because a fierce drought has reduced hydropower production. Greece also opposes the 15% EU-wide target, which it argues overburdens its economy and consumers. Meanwhile, Poland has raised concerns about its energy security. A Polish official said Warsaw would “not agree to any solutions that may lead to the use of Polish natural gas reserves for the needs of other member states”. France, Italy, Denmark, the Netherlands and Poland were among the countries that opposed giving the commission the power to declare a supply emergency. Instead it is proposed that EU member states make that critical decision. Under revised proposals, which were still being discussed by EU deputy ambassadors on Monday, countries can get an exemption from the 15% target if they are not connected to the gas interconnector system of any other member states. The target can also be eased if countries offer to send gas to a member state in need. EU sources rejected suggestions the plan was designed for Germany, arguing all member states would feel the economic pain of a Russian gas shut down. “I don’t buy the logic that all this is for Germany,” said one senior EU official. “It’s not about who will be hit first because if [a supply shock] hits then I think the problem will be immediately shared. We are in the internal market and … the pain will be substantial for all member states.” The European Commission president, Ursula von der Leyen, last week said it was likely the Kremlin would order a complete shutdown of Russian gas to the EU, dealing a hammer blow to the European single market. EU officials have suggested countries speed up the shift to renewables, but have also said states could consider delay to exiting coal and nuclear power. Belgium’s government announced last week it had reached a political agreement to extend the life of two nuclear power plants by 10 years, citing national security. The Doel 4 and Tihange 3 reactors will be restarted in 2026, as the Belgian government revised a plan to exit all nuclear power by 2025.

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