Monday, August 8, 2022

The EU is scrambling to salvage its plan to cut gas use as countries continue to ask for exemptions

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Russia reduced Nord Stream 1 capacity to 20 percent on Monday, an ominous sign of coming energy problems in the winter

European Union officials are scrambling to salvage gas-cutting plans this winter as key countries demand exceptions to the proposals aimed at spreading the cost across the bloc.

Urgency was heightened on Monday after Russian energy giant Gazprom announced it would halve supplies via Nord Stream 1, the pipeline Europe previously feared might not be back online after a recent period of maintenance.

The rationing scheme announced by the European Commission last week aims to cut gas consumption across the EU by 15 percent over the next few months if Russia shuts down its vital pipeline supplies.

However, many EU governments, particularly those in southern Europe less dependent on Russia, have watered down plans. They argue that the countries most dependent on Russian gas should be the ones that should bear the brunt of any consumption cuts.

Other countries say rationing should reflect the amount of gas countries have already been able to secure in storage. Further opt-outs have been requested by countries capable of supplying gas to other EU members through liquefied natural gas (LNG) shipments or pipelines. And a new amendment to the draft plan now says that industries critical to the EU’s internal market should also be exempted. “Member States should be free to choose the appropriate measures to achieve demand reduction,” it says.

The haggling comes as Germany’s energy regulator has warned that even a blanket 15 percent cut could be too little, and has called for an extra effort from German households and industrial users to cut consumption by 20 percent this winter.

The EU imported 40 percent of its natural gas, or 155 billion cubic meters, from Russia last year, but Germany did 55 percent, with most of it delivered via the Nord Stream 1 gas pipeline, which runs from Siberia and under the Baltic Sea. Some countries do not import Russian gas, including Spain, Portugal, Ireland and Cyprus. Moscow has already halted gas supplies to Finland, Poland, Bulgaria and the Baltic States, all of which have switched to other sources with relative ease.

Russian gas giant Gazprom said Monday it would reduce daily gas deliveries via the Nord Stream 1 pipeline to 33 million cubic meters from Wednesday, about 20 percent of the pipeline’s capacity, about half of current delivery. It was claimed that the “technical condition of the turbine engine” forced the measure, and the new reduction comes just days after Gazprom resumed gas supplies after 10 days of maintenance.

The Commission says the EU can no longer afford to rely on Moscow’s energy exports after Russia invaded Ukraine. Since February, the EU has vowed to divest itself of Russian gas supplies by 2027, and the bloc has already agreed to end Russian coal and oil imports. The gas rationing plan would initially be voluntary but could become mandatory if at least five countries apply for an EU-wide warning.

Data from Gas Infrastructure Europe shows the EU’s storage facilities are 66 percent full, up just 1.5 percent since the Nord Stream pipeline returned to service after maintenance last week. This compares to a five-year average of 67 percent and 54 percent at this point last year. The EU is targeting 80 percent storage capacity by November 1 to ensure there are no disruptions in winter.

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