Russia’s gas flow to Europe drops, hindering bids to replenish stores


Russia’s gas supply to Europe via the London — Nord Stream 1 pipeline declines further on Thursday, Moscow puts a brake on Europe’s competition to replenish gas stocks with further delays in repairs stopping all flows Said there is a possibility.

The flow slowed when German, Italian and French leaders visited Ukraine. Ukraine wants quick delivery of weapons to fight the invading Russian troops and wants to support Kyiv’s accession to the European Union.

Russia’s state-owned Gazprom said it was cutting its second gas supply in a few days via Nord Stream 1, which runs under the Baltic Sea towards Germany. With the latest moves, supply will be reduced to only 40% of the capacity of the pipeline.

Kremlin spokesman Dmitry Peskov said supply declines were unplanned and related to maintenance issues. References to previous comments that Russia was unable to secure the return of equipment sent to Canada for repairs.

Germany said Russia’s excuses were technically “unfounded” and instead aimed at raising gas prices. Italy said Moscow could take advantage of this issue to put political pressure on it.

Wholesale gas prices in the Netherlands, the European benchmark, soared about 30 percent on Thursday afternoon.

Russia’s European Union ambassador said a problem with Canada’s turbine repair could completely stop the flow of state-owned news agency RIA Novosti through the pipeline.

Alexei Miller, CEO of Gazprom, a state-owned company that monopolizes Russia’s gas exports through the pipeline, has returned equipment from Canada to the Portovaya compressor station in the pipeline due to western sanctions. Said that it became impossible to secure.

Gazprom Germania
March 30, 2022, the headquarters of Gazprom Germania, the German unit of the Russian natural gas company Gazprom in Berlin, Germany. (SeanGallup / Getty Images)

European competition to replenish storage

Nord Stream 1 is capable of pumping about 55 billion cubic meters (bcm) annually into the European Union, which last year imported about 140bcm of gas from Russia via a pipeline.

Germany, like other European countries, is competing to replenish its gas storage facilities, so it will be 80% full by October and 90% by November before winter comes. Currently, the store is 52% full.

A head of the German energy regulator said reducing the flow through Nord Stream 1 would make the job harder.

“We’ve probably survived the summer because the heating season is over, but it’s imperative to fill the storage to survive the winter,” Klaus Mueller told the Linish Post on Thursday. rice field.

Uniper, Germany’s largest importer of Russian gas, said its supply was reduced by a quarter of the agreed amount, but could fill the shortfall from other sources. Electricity producer RWE said there was a limit on the last two days.

Slovakia’s state-owned gas importer SPP said it expects Russia’s gas supply to be cut by about 30% on Thursday, and Czech power company CEZ saw a similar decline, but other sources. He said he was filling the gap with.

The European Union aims to ensure that gas storage facilities across blocks in 27 countries are 80% full by November.

By the end of October, Northwestern Europe’s reserves could be 88% instead of 90%, 1b cm less than planned, according to Goldman Sachs analysts.

Creating an emergency response plan

Germany is not alone in the face of supply declines.

Austria’s OMV said Gazprom had notified of a decline in deliveries, France’s Engie said flows had declined but clients were unaffected, and Italy’s Eni said it would receive 65% of the amount requested by Gazprom. rice field.

The Italian government said that if Russia’s gas supply cuts continue for the next few days, all possible steps have been taken to address the situation. Other European countries are also developing emergency response plans.

In addition to the challenges, Nord Stream 1 will shut down completely during the annual maintenance of the pipeline from July 11th to 21st.

Norway, Europe’s second-largest exporter after Russia, has been pushing production to support the European Union with the goal of ending Russia’s dependence on fossil fuels by 2027.

Centrica in the United Kingdom has signed a contract with Norway’s Equinor to supply the United Kingdom with additional gas for the next three winters. The UK is not dependent on Russian gas and can also be exported to Europe via a pipeline.

European countries have also boosted imports of liquefied natural gas (LNG), but Europe’s LNG import capacity is limited and the already tight LNG market faces the additional challenge of disrupting US LNG production. ..

Last week’s fire at a US LNG export plant in Texas operated by Freeport LNG means the plant will be offline until September and then only partially operational until the end of 2022.

The facility, which accounts for about 20% of US LNG exports, is a major supplier to European buyers.

“In our view, there is a risk of further delays,” said Jeffreys, an investment banking analyst, and regulators approve the resumption while two investigations into the cause of the LNG leak at the plant. He added that he needed to.

Nina Chestney

Reuters

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