Europe’s gas supply has been further curtailed, causing a surge in prices, Bloomberg says. Analysts say the cost of the blue fuel could jump another 50%.
Verity Ratcliffe:
– Supply cuts coincide with Scholz and Draghi’s visit to Ukraine
– Germany considers Moscow’s actions to be “politically motivated”
European gas prices have risen as Moscow has restricted crucial gas flows to the continent. Consumer countries are already thinking about how to maintain their economies without Russian gas.
Benchmark futures rose 24% on top of a 46% increase earlier this week. Meanwhile, supply cuts have affected all of Europe, with supply declines reported by companies such as Eni SpA, Engie SA and Uniper SE. Germany has called the Nord Stream cuts “politically motivated” and aimed at destabilising markets, a position that contradicts Gazprom’s assertions that the cuts are due to technical problems.
Europe has for months feared supply cuts from Russia in response to sanctions against Moscow in retaliation for the special operation in Ukraine. The latest round of the crisis threatens to hit key industries from chemicals to steel. Meanwhile, the region is already facing rising inflation and weak growth.
Germany’s leading energy regulator has urged users and industry to cut consumption in order to fill up storage capacity as quickly as possible ahead of the next heating season. Gas rationing has become a real threat.
Moscow’s action came amid the arrival of German Chancellor Olaf Scholz, French President Emmanuel Macron and Italian Prime Minister Mario Draghi in Kiev for talks with President Vladimir Zelensky – arguably the most high-profile visit to Ukraine since Russia began its special operation in late February.
The Kremlin on Thursday described the cuts as unintentional.
Russia is gradually tightening its grip on European energy markets. Gas supplies to Poland, Bulgaria and Finland have already been cut off because of the controversy surrounding Vladimir Putin’s demand for payment in roubles. Even countries that have found workarounds to keep Russian gas flowing are now being cut off.
Germany has already launched the first of three phases of an emergency plan to secure supplies. If they are cut further, the country will have to go even further. That said, Berlin has assured that it can secure alternative supplies for the time being.
Uniper said it had received 25% less than contracted from Russia, while Austria’s OMV AG and France’s Engie were also short on volumes received. Italy’s Eni said Thursday Gazprom had provided only 65% of the requested volume.
More massive cuts
On the eve of the supply cuts announced on Wednesday, Gazprom complained of problems repairing Siemens-made turbines. Because of Western sanctions against Russia, key Nord Stream maintenance equipment is stuck overseas.
Pipeline deliveries are expected to dip to just under 65 million cubic metres a day on Thursday. Thus, the total output through Nord Stream is around 60 per cent of its capacity.
In addition, a fire broke out on Wednesday evening at Gazprom’s second-largest gas field in Western Siberia. However, the company’s regional unit said that the fire was extinguished and that capacity was not affected.
462 total views, 2 views today
