New Russia gas halt tightens energy screws on Europe

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Pipes at the landfall facilities of the ‘Nord Stream 1’ gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke

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FRANKFURT/LONDON, Aug. 31 (Reuters) – Russia on Wednesday halted gas supplies to Europe via a major pipeline, exacerbating economic struggles between Moscow and Brussels and raising prospects of recession and energy rationing in some of the region’s wealthiest countries .

The Nord Stream 1 maintenance outage means that no gas will flow to Germany between 0100 GMT on August 31 and 0100 GMT on September 3, according to Russian state energy giant Gazprom (GAZP.MM). read more

Data from the Nord Stream 1 operator’s website on Wednesday 0600-0700 Central European Time (0400-0500 GMT) showed flows at zero, the third straight hour with no flows. read more

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European governments fear Moscow could extend the outage in retaliation for Western sanctions it imposed after its invasion of Ukraine, and have accused Russian President Vladimir Putin of using the energy supply as a “weapon of war”. Moscow denies doing this.

Further restrictions on Europe’s gas supply would exacerbate an energy scarcity that has pushed wholesale gas prices up by more than 400% since August last year, sparking a painful cost of living crisis for consumers and businesses and forcing governments to spend billions to lighten the burden. read more

In Germany, inflation reached its highest level in nearly 50 years in August and consumer confidence is expected to hit a record low for the third straight month next month as households brace for higher energy bills. read more

Unlike last month’s 10-day maintenance for Nord Stream 1, the upcoming work was announced less than two weeks in advance and will be performed by Gazprom and not Nord Stream AG, focusing on the last working turbine on the station.

Moscow, which reduced supplies via Nord Stream 1 to 40% of capacity in June and to 20% in July, blames maintenance issues and sanctions that hinder the return and installation of equipment.

Gazprom said the latest shutdown is necessary to carry out maintenance on the pipeline’s only remaining compressor.

Yet Russia has also completely cut off supplies to Bulgaria, Denmark, Finland, the Netherlands and Poland and reduced flows through other pipelines since the launch of what Moscow calls its “special military operation” in Ukraine. read more

Gazprom is simply using an excuse to cut off supplies of natural gas to its French contractor, the Paris energy minister said in relation to a separate dispute over payments, but added that the country had anticipated the loss of supply.

‘ELEMENT OF SURPRISE’

German Economy Minister Robert Habeck, on a mission to replace Russian gas imports by mid-2024, said earlier this month that Nord Stream was “fully operational” and there were no technical problems as Moscow claimed.

Klaus Mueller, president of Germany’s network regulator, said that while a resumption of flows would help Germany’s security of supply, no one could say what the consequences would be if flows remained at zero. read more

Europe’s largest economy is making more than expected progress in filling its gas storage facilities, but it is not enough to get the country through the winter, he said.

Reduced flows through Nord Stream have complicated efforts across Europe to fill vital gas storage facilities, a key strategic goal to get through the winter months when governments fear Russia will halt flows altogether.

“It’s a bit of a miracle that gas fill levels in Germany have nevertheless continued to rise,” Commerzbank analysts wrote, adding that Germany had thus far managed to buy sufficient volumes at higher prices elsewhere.

In the meantime, however, some Europeans are voluntarily cutting their energy consumption, including limiting the use of electrical appliances and showering at work to save money, while companies brace for possible rationing. read more

At 83.26%, Germany is already within reach of an 85% target for its national gas storage tanks by October 1, but it has warned that reaching 95% by November 1 would be a challenge unless businesses and households drastically reduce consumption. Reduce.

For the European Union as a whole, the current storage level is 79.94%, just below an 80% target by October 1, when the continent’s heating season begins.

Analysts at Goldman Sachs said their basic assumption was that this outage would not be extended.

“If it did, there would be no element of surprise and lower revenues, while low (Nord Stream 1) flows and the occasional drop to zero have the potential to keep market volatility and political pressure on Europe higher,” they said.

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Reporting Nina Chestney and Christoph Steitz; Additional reporting by Matthias Inverardi, Bharat Govind Gautam and Eileen Soreng; Edited by Veronica Brown, Carmel Crimmins and Lincoln Feast.

Our Standards: The Thomson Reuters Trust Principles.

Nina Chestney

Thomson Reuters

Oversees and coordinates EMEA reporting on electricity, gas, LNG, coal and carbon markets and has 20 years experience in journalism. Writes about those markets, but also about climate change, climate science, the energy transition and renewable energy and investments.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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