The European Union told member states on Wednesday to reduce gas consumption by 15% until March as part of an emergency plan, after Russian President Vladimir Putin warned that Russian supplies to Europe via the largest pipeline could be reduced further.
After a 10-day pause for annual maintenance, deliveries via the Nord Stream 1 pipeline, which accounts for more than a third of Russian gas exports to the EU, are set to resume on Thursday.
However, supplies via that route had already been reduced prior to the maintenance outage due to a dispute over sanctioned parts, and they may now be reduced further, while flows via other routes, such as Ukraine, have also been reduced since Russia invaded its neighbor in February.
The disruptions have hampered Europe’s efforts to replenish gas supplies before winter, raising the prospect of rationing and further crimping fragile economic growth if Moscow restricts flows further in retaliation for Western sanctions over the Ukraine conflict.
The European Commission proposed a voluntary target for all EU member states to reduce their gas consumption by 15% from August to March, compared to their average consumption in the same period from 2016 to 2021.
“Russia is attempting to blackmail us. Russia employs energy as a weapon. As a result, whether it is a partial, major cut-off of Russian gas or a total cut-off of Russian gas, Europe must be prepared “According to EU Commission President Ursula von der Leyen.
If the EU declares a significant risk of severe gas shortages, the proposal would allow Brussels to make the target mandatory.
The move, which requires the approval of EU member states, will be discussed on Friday in order for ministers to approve it at an emergency meeting on July 26.
“We believe that a complete disruption is likely, and it is especially likely if we do nothing and leave ourselves vulnerable to it,” said one EU official. “Waiting will be more expensive, and we will be dancing to Russia’s tune.”
Data show that EU states are attempting to ensure that storage facilities are 80 percent full by November 1, up from about 65 percent now.
According to European politicians, Russia is reducing deliveries due to technical issues. The Kremlin maintains that Russia is a reliable energy supplier and blames reduced flows on sanctions.
According to two Russian sources familiar with Russia’s export plans, Nord Stream 1 flows are expected to resume on time on Thursday after being halted on July 11 for annual maintenance.
However, they stated that it would fall short of its daily capacity of 160 million cubic metres (mcm).
Kremlin-controlled In June, Gazprom reduced gas exports via the route to 40% capacity, blaming the delays on the return of a turbine that Siemens Energy was servicing in Canada.
Additional European Union Reductions.
This week, it was reported that the turbine was on its way back, though Gazprom said on Wednesday that it had not received documentation to reinstall it and that the turbine’s return and maintenance of other equipment were required to keep the pipeline running safely.
Putin suggested that supplies via the pipeline that runs beneath the Baltic Sea to Germany, Europe’s economic powerhouse that has relied heavily on Russian fuel, could be reduced further, adding to European supply concerns.
Since the Ukraine crisis erupted, gas prices have skyrocketed in volatile trade. On Wednesday, the front-month gas contract climbed above 160 euros per megawatt hour (MWh), up 360 percent from a year ago but still below its March peak of 335 euros.
The price increase has put pressure on utility companies, causing them to go bankrupt. In Germany, the government intends to invest billions of euros in Uniper, the country’s largest buyer of Russian gas.
Putin stated that at Nord Stream 1, there were five gas pumping units operated by Siemens Energy, with one unit out of service due to “crumbling of the inside lining.”
“There are two operational machines, which pump 60 million cubic meters per day… If one is not returned, a new one of 30 million cubic metres will be created. Is this something to do with Gazprom? “He stated.
Putin stated that another of the gas pumping turbines would be sent for maintenance on July 26.
He also claimed that Gazprom, which has a monopoly on Russian gas exports via pipeline, was not to blame for a reduction in gas transit capacity to Europe via a network of pipelines.
He blamed Kyiv for closing one route through Ukraine, despite Ukraine’s authorities blaming the closure on Russia’s invasion.
According to Siemens Energy, maintaining turbines for Nord Stream 1 is a routine task. It stated that it would continue to maintain equipment under sanctions if possible and where necessary, and that it would work as quickly as possible.
In an eastward shift, Gazprom announced on Wednesday that Russian gas supplies to China via its Power of Siberia pipeline set a new daily record. Even as deliveries to Europe decline, Moscow has increased capacity to supply China, despite the fact that Russia’s far east network is not linked to the European supply system.
Meanwhile, European nations have been looking for alternative supplies, despite the fact that the global gas market was already stretched before the Ukraine crisis, with demand for the fuel recovering from the pandemic-induced slump.
These efforts have included sourcing more gas from pipeline-connected suppliers such as Algeria, as well as building or expanding more liquefied natural gas (LNG) terminals to receive shipments from much further afield, such as the United States.