Europe rushes to cut Russian gas consumption amid new warning from Putin

  • Nord Stream 1 gas pipeline out of service for maintenance
  • The pipeline is due to resume pumping on Thursday
  • EU says states must act now to reduce gas consumption
  • Germany, others have rationing and other plans in place

BRUSSELS/LONDON, July 20 (Reuters) – The European Union will present emergency plans on Wednesday to limit the use of gas after President Vladimir Putin warned that Russian supplies sent via the largest gas pipeline to Europe , Nord Stream 1, were in danger of being reduced further.

Deliveries through the pipeline, which accounts for more than a third of Russian gas exports to the EU, are due to resume on Thursday after a 10-day hiatus for annual maintenance.

But supplies via this route had been cut even before the maintenance outage due to a dispute over sanctioned parts, and may now face further cuts, while deliveries via other routes, such as Ukraine , have also declined since Russia invaded its neighbor in February.

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The disruptions have hampered Europe’s efforts to fill gas reservoirs ahead of winter, raising the risk of rationing and another blow to fragile economic growth if Moscow further restricts flows in retaliation for Western wartime sanctions in Ukraine.

The European Commission’s plan will encourage countries to reduce their gas consumption. A draft seen by Reuters proposed a voluntary target for countries to reduce gas demand over the next eight months, which could be made legally binding in an emergency.

EU officials have said the target reduction will be 10% to 15%, with any plan to be approved by members of the 27-nation bloc. But EU officials say it is vital to act now rather than waiting to see what happens to flows via Nord Stream 1 or other routes.

“We think complete disruption is likely and it’s especially likely if we don’t act and make ourselves vulnerable to it,” one said. “If we wait, it will be more expensive and it will mean that we will dance to the tune of Russia.”

European politicians have accused Russia of playing politics with its gas supplies, using technical problems as a pretext to cut deliveries. The Kremlin says Russia remains a reliable energy supplier and has blamed the reduced flows on sanctions.

Two Russian sources familiar with Russia’s export plans said streams via Nord Stream 1 are expected to restart on time on Thursday after being halted on July 11 for annual maintenance.

But they said it would be below its capacity of 160 million cubic meters (mcm) per day.

Gazprom (GAZP.MM), controlled by the Kremlin, reduced its gas exports via road to 40% of its capacity in June, blaming delays in the return of a turbine that Siemens Energy (ENR1n.DE) was servicing in Canada .

ADDITIONAL DISCOUNTS

This sanctioned turbine 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 return of the turbine and the maintenance of other equipment was necessary to maintain the pipeline. run safely. Read more

Putin suggested there could be a further cut in supplies via the pipeline that runs under the Baltic Sea to Germany, Europe’s economic powerhouse that has relied heavily on Russian fuel, adding to European concerns in terms of supply. Read more

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

Putin said there were five gas pumping units, operated by Siemens Energy at Nord Stream 1 and another unit was out of service due to “chilling lining”.

“There are two machines working there, they pump 60 million cubic meters a day… If one is not returned, there will be one, which is 30 million cubic meters. Is- Gazprom has anything to do with it?” he said.

Putin said another of the gas-pumping turbines was to be sent for maintenance on July 26.

He also said that Gazprom, which has a monopoly on Russian gas exports via pipeline, was not responsible for reducing gas transit capacity through a network of pipelines to Europe.

He blamed Kyiv for closing a route through Ukraine, although Ukrainian authorities blamed the closure on the Russian invasion.

Siemens Energy said maintenance of the Nord Stream 1 turbines would normally be a routine affair. He said he would continue to maintain the equipment under sanctions if possible and necessary, and would work as quickly as possible. Read more

In a pivot to the east, Gazprom said Wednesday that Russian gas supplies to China through its Power of Siberia pipeline hit a new daily record. Moscow has increased its supply capacity in China even as deliveries to Europe dwindle, although the Russian network in the Far East is not connected to the European supply system.

European nations, meanwhile, have been seeking alternative supplies, although the global gas market was tight even before the Ukraine crisis, with fuel demand recovering from the pandemic-induced slowdown.

These efforts have included seeking more gas from suppliers linked to Europe by pipeline, such as Algeria, and building or expanding more liquefied natural gas (LNG) terminals to receive shipments from much further afield, like the United States.

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Reports from Reuters offices; Written by Edmund Blair; Editing by Carmel Crimmins

Our standards: The Thomson Reuters Trust Principles.

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