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EU tells members to cut gas usage after new Putin warning

Nord Stream 1 pipeline remains out of action for maintenance as Germany, and other European countries gear up for rationing.

AP

Gas disruptions from Nord Stream 1 have hampered Europe's efforts to refill gas storage before winter

The European Union has told member states to cut gas usage by 15 percent until March as an emergency step after President Vladimir Putin warned that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.

Deliveries via Nord Stream 1, which accounts for more than a third of Russian gas exports to the EU, are due to resume on Thursday after a 10-day halt for annual maintenance.

German gas network operator Gascade said on Wednesday it expects flows to resume at pre-maintenance levels based on current requests for gas.

On July 10, the last full day before maintenance on the pipeline started, flows stood at around 698 GWh.

Supplies via the route had been reduced even before the maintenance outage in a dispute over sanctions, and may now be cut further, while flows via other routes, such as Ukraine, have also fallen since Russia attacked its neighbour in February.

The disruptions have hampered Europe's efforts to refill gas storage before winter, raising the risk of rationing and another hit to fragile economic growth if Moscow further restricts flows in retaliation for Western sanctions over the war in Ukraine.

The European Commission proposed a voluntary target for all EU states to cut gas use by 15 percent from August to March, compared with their average consumption in the same period in 2016-2021.

Full disruption 'likely'

"Russia is blackmailing us. Russia is using energy as a weapon. And therefore, in any event, whether it's a partial, major cut-off of Russian gas or a total cut-off of Russian gas, Europe needs to be ready," EU Commission President Ursula von der Leyen said.

The Commission proposal would enable Brussels to make the target mandatory in a supply emergency, if the EU declared a substantial risk of severe gas shortages.

The move, which needs the backing of EU states, will be discussed on Friday so ministers can approve it on July 26.

"We believe that a full disruption is likely," one EU official said. "If we wait, it will be more expensive and it will mean us dancing to Russia's tune."

EU states are trying to ensure storage facilities are 80 percent full by November 1, from about 65 percent now.

Will flows resume?

European politicians say Russia is using technical issues as a pretext to cut deliveries. The Kremlin says Russia is a reliable energy supplier and blames sanctions for reduced flows.

Two Russian sources familiar with export plans said flows via Nord Stream 1 were expected to restart on Thursday but below capacity of 160 million cubic metres (mcm) per day.

Kremlin-controlled Gazprom cut gas exports via the route to 40 percent capacity in June, blaming delays to the return of a turbine that Siemens Energy was servicing in Canada.

That turbine, which was caught up in sanctions, was reported this week to be on its way back, although Gazprom said on Wednesday it had not received documentation to reinstall it and said the turbine's return and maintenance of other equipment was needed to keep the pipeline running safely.

Putin said there might be a further reduction in supplies or even a complete halt to flows via the pipeline that runs under the Baltic Sea to Germany, which relies heavily on Russian fuel.

He said equipment was being returned from Canada but said the quality of the returned gear and other parameters meant the pipeline might still be shut down in the future.

Gas prices have rocketed in volatile trade since the Ukraine crisis erupted. The front-month gas contract climbed above 160 euros per megawatt hour (MWh) on Wednesday, 360 percent up on a year ago but below its March peak of 335 euros.

SOURCE: Reuters