Europe May Face Gas Shortage Next Year – IEA

File photo of gas plant

 

Europe must act immediately to prevent a shortage of natural gas next year as Russia slashes deliveries in the wake of the Ukraine war, the International Energy Agency warned Thursday.

The region could lack 30 billion cubic metres that it needs “to fuel its economy and sufficiently refill storage sites during the summer of 2023, jeopardising its preparations for the winter of 2023-24,” the Paris-based agency said in a report.

The IEA said the shortfall would occur if Russia stops pipelines deliveries completely and China steps up its imports of liquefied natural gas, which Europe has relied upon to replace Russian supplies.

READ ALSO: Millions At Risk Of Hunger In South Sudan – UN

Russia drastically cut supplies to Europe in suspected retaliation against Western sanctions over its invasion of Ukraine, but the region was able to fill storage sites for this upcoming winter.

Moscow delivered 60 billion cubic metres of gas to Europe this year, but the IEA said in a report that it is “highly unlikely” that Russia will provide the same amount in 2023 and could cease deliveries entirely.

Europe “needs to take immediate action” to avoid the risk of a shortage next year, said the agency, which advises developed countries on energy policy.

Russia Suspends Gas To Italy After ‘Problem’ In Austria

In this file photo, Russian President Vladimir Putin chairs a meeting on the situation in the oil and gas sector at the Novo-Ogaryovo state residence outside Moscow, on April 14, 2022. Mikhail Klimentyev / Sputnik / AFP

 

Russia’s Gazprom has suspended gas deliveries to Italy’s Eni, blaming a transport problem in Austria, the Italian energy giant said on Saturday.

“Gazprom told us that it was not able to confirm the delivery of the volumes demanded for today, citing the impossibility of gas transport through Austria,” Eni said in a statement.

As a result, “Russian gas flows to Eni via the Tarvisio entry point will be naught”, it said.

Most of Russian gas delivered to Italy passes via Ukraine through the Trans Austria Gas Pipeline (TAG), to Tarvisio in northern Italy on the border with Austria.

Gazprom later in the day said in a statement that the transportation of Russian gas through Austria had been suspended “due to the refusal of the Austrian operator to confirm the transport nominations”.

“The reason is related to the regulatory changes that took place in Austria at the end of September,” it added.

“Gazprom is working on solving the problem together with Italian buyers.”

In Austria, regulatory authority E-Control said the new rules, which entered into force on Saturday, had been “known to all market actors for months”.

It said it expected “all to conform and take the necessary measures to fulfil their obligations”.

The problems were linked to “contractual details” linked to the transit of gas towards Italy, it said on Twitter.

Before the war in Ukraine, Italy imported 95 percent of the gas it consumes — about 45 percent of which came from Russia.

Outgoing Prime Minister Mario Draghi has signed new deals with other gas producers to reduce Italy’s reliance on Russia, lowered to 25 percent as of June, while accelerating a shift towards renewable energies.

Climate Change: VP Osinbajo Meets John Kerry At Presidential Villa

 

Vice President Yemi Osinbajo, SAN, on Tuesday met the United States Special Presidential Envoy for Climate, John Kerry, at the Presidential Villa, Abuja.

Kerry who was Secretary of State under the Obama administration, is visiting Nigeria barely two weeks after VP Osinbajo’s returned from his work visit to the United States.

While details of their meeting remains unknown, it is believed to be a follow-up on the Vice President’s proposal for a Debt-For-Climate Swap deal.

During his last visit to the US, VP Osinbajo proposed a Debt-For-Climate Swap deal to achieve a just and equitable energy transition for Africa.

Explaining the DFC concept yesterday during a lecture on a just and equitable energy transition for Africa at the Center for Global Development in Washington D.C, Prof Osinbajo stated that “debt for climate swaps is a type of debt swap where bilateral or multilateral debt is forgiven by creditors in exchange for a commitment by the debtor to use the outstanding debt service payments for national climate action programs.


READ ALSO: 2023: How I Will Tackle Insecurity, Crawling Economy – Atiku


“Typically, the creditor country or institution agrees to forgive part of a debt, if the debtor country would pay the avoided debt service payment in a local currency into an escrow or any other transparent fund and the funds must then be used for agreed climate projects in the debtor country.”

Justifying the rationale behind such a debt swap deal, the Vice President submitted that the commitment to it would “increase the fiscal space for climate-related investments and reduce the debt burden for participating developing countries.

“For the creditor the swap can be made to count as a component of their Nationally Determined Contributions (NDC).”

He added that to make this efficient “there are of course significant policy actions necessary to make this acceptable and sustainable.”

The Vice President also proposed the greater participation of African countries in the Global Carbon Market while exploring financing options for energy transition.

According to him, there is a need to take a comprehensive approach in working jointly towards common goals, including the market and environmental opportunities presented by the financing of clean energy assets in growing energy markets.

His words: “in addition to conventional capital flows both from public and private sources, it is also essential that Africa can participate more fully in the global carbon finance market.

“Currently, direct carbon pricing systems through carbon taxes have largely been concentrated in high and middle-income countries. However, carbon markets can play a significant role in catalyzing sustainable energy deployment by directing private capital into climate action, improving global energy security, providing diversified incentive structures, especially in developing countries, and providing an impetus for clean energy markets when the price economics looks less compelling – as is the case today.”

He encouraged developed countries to support “Africa to develop into a global supplier of carbon credits, ranging from bio-diversity to energy-based credits,” which would be a leap forward in aligning carbon pricing and related policy around achieving a just transition.

While also addressing the concerns of the African continent and other developing countries regarding a just transition, Prof Osinbajo noted that “the central thinking for most developing countries is that we are confronted on this issue of a just transition with two, not one, existential crises; the climate crisis and extreme poverty.

“The clear implication of this reality is that our plans and commitments to carbon neutrality must include clear plans on energy access if we are to confront poverty. This includes access to energy for consumptive and productive use and spanning across electricity, heating, cooking, and other end-use sectors.”

According to him, “nearly 90 million people in Asia and Africa who had previously gained access to electricity can no longer afford to pay for their basic energy needs. The inflationary pressures caused by the COVID-19 pandemic and other macroeconomic trends have been further exacerbated by the ongoing war in Ukraine.

“Countries worldwide have been hit by record prices on all forms of energy. Power prices are breaking records across the globe, especially in countries or markets where natural gas plays a key role in the energy mix.”

Prof Osinbajo sounded a note of caution, saying that “in such a global reality, limiting financing of gas projects for domestic use would pose a severe challenge to the pace of economic development, delivery of electricity access and clean cooking solutions, and the scale-up and integration of renewable energy into the energy mix.”

Speaking on Nigeria’s initiative to combat the unfolding crisis, the VP revealed that the country’s Energy Transition Plan “was designed to tackle the dual crises of energy poverty and climate change and deliver SDG-7 by 2030 and net-zero by 2060 while centring on the provision of energy for development, industrialization, and economic growth.

“We anchored the plan on key objectives including lifting 100 million people out of poverty in a decade, driving economic growth, bringing modern energy services to the full population and managing the expected long-term job losses in the oil sector due to global decarbonization.”

He also emphasized the role that natural gas “must play” in the short-medium term to facilitate the establishment of baseload energy capacity and address the nation’s clean cooking deficit in the form of LPG.

Europe Huddles Down For A Winter Without Russian Gas

In this file photo taken on November 08, 2011 the Nordstream gas pipeline terminal is pictured prior to an inaugural ceremony for the first of Nord Stream's twin 1,224 kilometre gas pipeline through the baltic sea, in Lubmin November 8, 2011. John MACDOUGALL / AFP
In this file photo taken on November 08, 2011 the Nordstream gas pipeline terminal is pictured prior to an inaugural ceremony for the first of Nord Stream’s twin 1,224 kilometre gas pipeline through the baltic sea, in Lubmin November 8, 2011. John MACDOUGALL / AFP

 

Woolly socks and thermostats turned down a notch: Europeans are preparing for a difficult winter without gas supplies from Russia, part of the fallout from the war in Ukraine.

Latvians have been adjusting since the end of July, when Russia stopped supplying gas to the Baltic former Soviet state.

They know what to expect in the coming months.

“Energy prices are so exorbitant that we already cut off the hot water from the city pipeline and installed our own hot water boiler,” said Juons Ratiniks, who lives in the city of Rezekne, near the Russian border.

“It is cheaper to use it when we actually need it than pay for constantly heated hot water,” supplied centrally, the retired border guard explained.

Politicians need to understand that people expected help when their energy bill started shooting up, said Ratiniks.

With elections due in October, he warned, “they better support heating for us — otherwise we’ll give heat to them!”

Bulgaria, Denmark, Finland, the Netherlands and Poland have also already had their gas cut, while other countries have seen their supply reduced drastically.

Deliveries of Russian gas to Germany via the Nord Stream pipeline will be halted for several days at the end of this month, the second stoppage this summer. While ostensibly for maintenance, Berlin has accused Moscow of halting supplies over Western sanctions imposed over Russia’s invasion of Ukraine.

Overall, supply was down in July by around 70 percent, year on year, according to several experts consulted by AFP.

‘Global energy crisis’

Governments around Europe are not relishing the prospect of cold radiators and factories forced to stop operating.

Many believe Russian President Vladimir Putin is using energy supplies as a strategic weapon to put pressure on nations that have applied sanctions against Moscow for its invasion of Ukraine.

The cut in supply has pushed the price of gas — and electricity — through the roof given that is what many power stations run on.

A surge in oil prices has further complicated matters, even if its value has fallen back somewhat recently.

“The world is experiencing the first truly global energy crisis in history,” Fatih Birol, executive director of the International Energy Agency, wrote last month.

“The situation is especially perilous in Europe, which is at the epicentre of the energy market turmoil.”

Natural gas is so important to so many countries — particularly Germany, which needs it for its heavy industries — that it was exempted from European sanctions against Russia.

Coal, in contrast, is subject to a total embargo, while for oil, a progressive embargo applies.

‘Operation Thermostat’

The gas supply from Russia to Germany from the Nord Stream 1 pipeline has already been drastically cut back.

“We now assume that Russian gas flows to Europe via Nord Stream 1 will fluctuate between zero and 20 percent capacity in the coming months,” said Matt Oxenford of the Economist Intelligence Unit.

And that, he added, would lead to a recession in Europe in the winter of 2022-2023.

“Given current gas infrastructure, Germany cannot compensate for an 80 percent cut in Russian gas without a drastic reduction in demand, leading to a recession over the winter,” he added.

And with Germany a centre of industrial supply chains, that would have a knock-on effect across Europe, wrote Oxenford.

Businesses will suffer cuts before households, and the governments in France and Germany are already looking at who will have to suffer first.

But ordinary people are also being told they will have to adjust to the new reality.

The European Union has told its 27 member countries that they will have to cut their gas consumption by 15 percent.

Italy launched earlier this year what it called “Operation Thermostat” to try to lower heating and cut back on air conditioning in schools and public buildings. Spain and Germany have followed suit.

Germany’s summer campaign focussed on lowering the air conditioning on public transport and buying more water-efficient shower heads. Several cities have lowered the temperature in their swimming pools and made cuts in urban lighting.

Coal and LNG

France has frozen gas prices for individuals, but in Germany, the bills for householders will rise by several hundred euros a year.

Given what threatens to be a hard winter, the consumer advice centre in the state of North Rhine-Westphalia says it has never been so busy in its 40-year history.

Many people say they are worried they will be cut off because they cannot pay the bills, said spokesman Udo Sieverding.

Some were looking at replacing their oil or gas supply with solar panels, while others were turning to coal, he added.

Tenants needed to put money aside early and talk to their landlords, he advised.

“Nevertheless, there will be many households that cannot pay the rising energy prices.”

France, meanwhile, is reviving an anti-waste campaign first rolled out in the 1970s.

Shops that use air conditioning, for example, must keep their doors closed — or face a fine.

Here too there has been a rush towards coal despite the fact that it is highly polluting.

France’s government has reconsidered a decision to close down a coal-fired station, despite an outcry from environmental campaigners.

AFP

European Gas Prices Surge To Six-Month Peak

A bus driver fills up at a gas station in Brooklyn on August 11, 2022 in New York City. Spencer Platt/Getty Images/AFP
A bus driver fills up at a gas station in Brooklyn on August 11, 2022 in New York City. Spencer Platt/Getty Images/AFP

 

European gas prices surged Tuesday to a six-month peak, exacerbating recession fears as the region faces the prospect of rationing following cuts to Russia supplies amid the war in Ukraine.

Oil prices, meanwhile, extended losses a day after tumbling more than five percent on fears demand will subside due to recessions or slow growth in major economies such as China.

Stocks mostly advanced despite the gloomy economic news on hopes central banks will let up on interest rate hikes.

In Europe, the natural gas reference price Dutch TTF rallied around 10 percent at one point to over 250 euros per megawatt hour — the highest level since the start of March, or not long after Russia’s invasion of Ukraine.

“Energy prices are soaring in Europe,” said market analyst Fawad Razaqzada at City Index and FOREX.com.

“Reduced Russian energy shipments of around only 20 percent of capacity through the Nord Stream 1 pipeline have increased the risk of rationing in the coming months,” he added.

Spiking gas prices would likely push European nations into recession, hitting demand for other goods such as oil.

“A slick of worry is growing about the darkening prospects for global growth as economies slow around the world, pushing down oil prices in expectation of lower demand,” noted Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown.

Signs that Iran is moving towards a nuclear deal added to the downward pressure on prices, with an agreement seen as allowing the country to restart oil sales into the world market.

Analysts said Tehran could provide 2.5 million barrels a day, giving a much-needed shot in the arm to supplies, which have been hammered by sanctions on Russia in response to its invasion of Ukraine.

Libya has also boosted production, helping prices drop to six-month lows and wiping out the gains seen after the Ukraine war started.

But analysts warned that there might still be some way to go on an Iran agreement, owing to upcoming US elections.

“A deal with Iran would likely not be popular with US voters and so is hard to envisage before the November mid-terms,” said National Australia Bank’s Ray Attrill.

“Markets are currently prone to optimism, though, and hopes for a deal… have added to downward pressure on oil prices.”

Walmart boost

European stocks advanced despite dismal survey data from Germany, with the relatively low value of the euro and pound providing a lift.

“The US dollar is edging back up again benefitting from its position as the best of a bad bunch when it comes to how well the global economy is doing,” said Michael Hewson at CMC Markets.

“The weakness in the latest Chinese economic data, along with rising power prices in Europe is helping to push money into the greenback and out of everything else,” he added.

Wall Street stocks traded mixed, with the Dow rising after Walmart beat expectations despite having earlier issued a profit warning.

Shares in the big-box retailer surged around five percent.

Major markets have been buoyed in recent days on bets that the Federal Reserve would not lift borrowing costs by 75 basis points for a third straight time next month after decades-high inflation eased in the United States as well as data showing the economy to be cooling.

The recent drop in oil prices will help reduce inflation.

Key figures at around 1530 GMT

West Texas Intermediate: DOWN 2.6 percent at $87.10 per barrel

Brent North Sea crude: DOWN 2.5 percent at $92.73 per barrel

New York – Dow: UP 0.3 percent at 34,111.91 points

EURO STOXX 50: UP 0.4 percent at 3,805.02

London – FTSE 100: UP 0.4 percent at 7,536.06 (close)

Frankfurt – DAX: UP 0.7 percent at 13,910.12 (close)

Paris – CAC 40: UP 0.3 percent at 6,592.58 (close)

Tokyo – Nikkei 225: FLAT at 28,868.91 (close)

Hong Kong – Hang Seng Index: DOWN 1.1 percent at 19,830.52 (close)

Shanghai – Composite: UP 0.1 percent at 3,277.88 (close)

Euro/dollar: UP at $1.0174 from $1.0166 Monday

Pound/dollar: UP at $1.2099 from $1.2055

Euro/pound: DOWN at 84.11 pence from 84.29 pence

Dollar/yen: DOWN at 134.29 yen from 133.33 yen

AFP

Germany Accuses Russia Of Blocking Gas Turbine Delivery

German Chancellor Olaf Scholz speaks during a press conference during a visit to the Silvestras Zukauskas landfill in Pabrade, Lithuania June 7, 2022. PETRAS MALUKAS / AFP

 

German Chancellor Olaf Scholz on Wednesday accused Russia of blocking the delivery of a turbine needed to keep gas flowing via the Nord Stream 1 pipeline to Europe.

The unit was “available and working” Scholz said, standing next to the turbine on a visit to the maker of Siemens energy.

“There is no reason why this delivery cannot happen,” Scholz said.

The turbine had received “all the approvals” it needed for export from Germany to Russia, he said.

Pipeline operators only needed to say that “they want to have the turbine and provide the necessary customs information for transport to Russia”, Scholz said.

Transferring the missing unit to Russia was “really easy”, he added.

Russian energy giant Gazprom has blamed the delayed return of the unit from Canada, where it was being serviced, for the initial reduction in deliveries of gas via the Nord Stream 1 gas pipeline.

Germany, which is heavily dependent on Russian gas, has dismissed the decision to limit supplies as “political”.

Deliveries via the undersea energy link were reduced to around 20 percent of capacity in late July after Gazprom halted the operation of one of the last two operating turbines due to the “technical condition of the engine”.

Germany has been working to wean itself off Russian energy imports since the invasion of Ukraine in February.

Amid a scramble by Europe’s biggest economy for other energy sources, Scholz said Wednesday that it “can make sense” to keep Germany’s remaining three nuclear plants running, despite a long-planned stop at the end of the year.

The government has said it will await the outcome of a new “stress test” of the national electric grid before determining whether to stick with the phaseout.

Extending the lifetime of the plants has set off a heated debate in Germany, with the parties in Scholz’s coalition divided on the issue.

AFP

Nigeria, Algeria, Niger Discuss Gas Pipeline To Europe

In this file photo taken on November 08, 2011 the Nordstream gas pipeline terminal is pictured prior to an inaugural ceremony for the first of Nord Stream's twin 1,224 kilometre gas pipeline through the baltic sea, in Lubmin November 8, 2011. John MACDOUGALL / AFP
PHOTO USED TO ILLUSTRATE STORY: In this file photo taken on November 08, 2011 the Nordstream gas pipeline terminal is pictured prior to an inaugural ceremony for the first of Nord Stream’s twin 1,224 kilometre gas pipeline through the baltic sea, in Lubmin November 8, 2011. John MACDOUGALL / AFP

 

African energy giants Algeria, Nigeria and Niger signed a memorandum of understanding Thursday on a vast gas pipeline project offering Europe potential future alternatives to Russian supplies, state media reported.

The Trans-Saharan Gas Pipeline (TSGP) would transport billions of cubic metres of gas some 4,128 kilometres (2,565 miles) from Nigeria in West Africa, north through Niger and on to Algeria.

From there it could be pumped through the Mediterranean undersea Transmed pipeline to Italy, or loaded onto liquefied natural gas tankers for export.

On Thursday, Algerian Energy Minister Mohamed Arkab hosted his counterparts from Nigeria and Niger, Timipre Sylva and Mahamane Sani, for talks on the project, state news agency APS reported.

READ ALSO: Manufacturers Ask FG To Removal 7.5% VAT On Diesel

The contents of the memorandum of understanding were not disclosed, but the long-dormant project has seen an uptick in interest in recent months as gas prices have surged following Russia’s invasion of Ukraine.

When the TSGP was first proposed in 2009, the cost of building it was estimated at $10 billion.

As well as serving European markets, gas could be diverted to serve markets along the route of the pipeline or elsewhere in the Sahel region.

Algeria, Africa’s largest natural gas exporter, has already seen increased demand following Moscow’s invasion of Ukraine, with Western nations scouring the globe to find supplies to replace oil and gas from Russia.

Algiers is seeking further ways to capitalise on high global energy prices.

But the TSGP would face formidable logistical and security challenges, passing through thousands of kilometres of desert where jihadist groups have waged a long insurgency.

“A pipeline like this would be hugely vulnerable, not just to attacks by jihadists but also by local communities if they feel they’re getting exploited by a project from which they derive no benefit,” said Geoff D. Porter, an energy expert with North Africa Risk Consulting.

“And then, who’s going to finance it?”

AFP

Russia Resumes ‘Unstable’ Gas Supplies To Europe Via Nord Stream

A photo taken on May 12, 2022 shows pipes at the Gasum plant in Raikkola, Imatra, Finland. Vesa Moilanen / Lehtikuva / AFP
A photo taken on May 12, 2022 shows pipes at the Gasum plant in Raikkola, Imatra, Finland. Vesa Moilanen / Lehtikuva / AFP

 

Russia on Thursday restored critical gas supplies to Europe through Germany via the Nord Stream pipeline after 10 days of maintenance, but suspicion lingered that the Kremlin would trigger an energy crisis on the continent this winter.

Germany, which is heavily dependent on Russian gas, had feared that Moscow would not reopen the pipeline after the scheduled work and accused Moscow of using energy as a “weapon”.

The showdown came amid the worst tensions in several years over Russia’s invasion of Ukraine. EU states have accused Russia of squeezing supplies in retaliation for Western sanctions over the war.

Klaus Mueller, head of Germany’s energy regulator, said gas flows were on track to return to 40 percent of the pipeline’s capacity — the same reduced level as before the maintenance work.

“But given the missing 60 percent (of supply) and political instability, there is no reason to sound the all-clear,” he tweeted.

German Economy Minister Robert Habeck angrily dismissed Russian claims that it was a guarantor of Europe’s energy supply, saying that Moscow had become a growing “insecurity factor” in the sector.

“In fact, Russia is using the great power we gave it to blackmail Europe and Germany,” Habeck of the ecologist Green party told reporters.

Enduring German reliance on Russian gas coupled with alarming signals from Moscow have turned up the pressure on Europe’s top economy.

A total shutdown of imports or a sharp reduction in the flow from east to west could have a catastrophic effect, shutting factories and forcing households to turn down the heat.

Even the resumption of 40 percent of supplies would be insufficient to ward off energy shortages in Europe this winter, experts warned.

“It is obvious that (Russian President Vladimir) Putin can and will turn off the tap again when it seems strategically convenient,” said energy economist Lion Hirth of Berlin’s Hertie School.

“We must therefore prepare for a winter without Russian gas. This means that saving gas must be at the centre of all political efforts.”

The International Monetary Fund said on Wednesday that a halt in supplies could shave 1.5 percent off Germany’s gross domestic product this year.

– ‘Will fulfil’ –

Russia’s state-owned energy giant Gazprom cut flows to Germany via the Nord Stream 1 pipeline under the Baltic Sea to some 40 percent of capacity in recent weeks, blaming the absence of a Siemens gas turbine that was undergoing repairs in Canada.

The turbine is reportedly en route to Russia and expected to arrive on Sunday at the earliest. The German government has rejected Gazprom’s explanation as an “excuse”, noting that the turbine was one of several available.

Moscow’s grounds for the supply shortfall shifted again on Thursday, as it said gas delivery problems to Europe were caused by Western sanctions.

“Any technical difficulties linked to this are caused by those restrictions that European countries introduced themselves,” Kremlin spokesman Dmitry Peskov told reporters, dismissing blackmail accusations as “completely” unfounded.

Putin insisted this week that Gazprom would meet all its delivery obligations “in full”.

He warned, however, that as another gas turbine was due to be sent for maintenance at the end of this month, energy flows could fall to 20 percent of capacity from next week.

– ‘Prepare for winter’ –

As of Wednesday, German gas reserves were about 65 percent of capacity according to official estimates. Habeck said he was setting targets to boost the level to between 90 and 95 percent by November.

The European Commission on Wednesday urged EU countries to reduce their demand for natural gas by 15 percent over the coming months, and to give it special powers to force through needed demand cuts if Russia severs the gas lifeline.

Habeck, who has said he is taking shorter showers to save energy, welcomed the EU measures and rolled out a package of national policies to comply with them.

In addition to boosting its gas reserves, Germany is implementing plans to temporarily revert to more coal power, will mandate energy savings in public buildings and impose new rules for efficiency in heating homes and offices.

“We must prepare for winter,” he said.

However Greece said that it was joined by Italy, Spain, Portugal, France, Malta and Cyprus in opposing the EU’s plan, arguing that they were far less dependent on Russian gas than Germany.

AFP

Russia Resumes ‘Unstable’ Gas Supplies To Europe Via Nord Stream

This file photo was taken on November 8, 2011, and shows a view of the gas pipeline terminal prior to an inaugural ceremony for the first of Nord Stream’s twin 1,224-kilometre gas pipelines through the Baltic Sea, in Lubmin, northeastern Germany.  (Photo by John MACDOUGALL / AFP) / 

 

Russia on Thursday restored critical gas supplies to Europe through Germany via the Nord Stream pipeline after 10 days of maintenance, but uncertainty lingered over whether the Kremlin would still trigger an energy crisis on the continent this winter.

Germany, which is heavily dependent on Russian gas, had feared that Moscow would not reopen the pipeline after the scheduled work and accused Moscow of using energy as a “weapon”.

The showdown came amid the worst tensions in several years over Russia’s invasion of Ukraine. Germany believes Russia is squeezing supplies in retaliation for Western sanctions over the war.

Klaus Mueller, head of Germany’s energy regulator, the Federal Network Agency, said that by late morning gas flows were on track to return to 40 percent of the pipeline’s capacity — the same reduced level as before the maintenance work.

“But given the missing 60 per cent (of supply) and political instability, there is no reason to sound the all-clear,” he tweeted.

Enduring German reliance on Russian gas coupled with alarming signals from Moscow has turned up the pressure on Europe’s top economy.

A total shutdown of imports or a sharp reduction in the flow from east to west could have a catastrophic effect, shutting factories and forcing households to turn down the heat.

Even the resumption of 40 per cent of supplies would be insufficient to ward off energy shortages in Europe this winter, experts warned.

The International Monetary Fund said on Wednesday that a halt in supplies could slash Germany’s gross domestic product this year by 1.5 per cent.

– ‘Will fulfil’ –

Russia’s state-owned energy giant Gazprom cut flows to Germany via the Nord Stream 1 pipeline under the Baltic Sea to some 40 per cent of capacity in recent weeks, blaming the absence of a Siemens gas turbine that was undergoing repairs in Canada.

The turbine is reportedly en route to Russia and expected to arrive on Sunday at the earliest. The German government has rejected Gazprom’s explanation as an “excuse”, noting that the turbine was one of several available.

Moscow’s explanation for the supply shortfall shifted again on Thursday, as it said that gas delivery problems to Europe were caused by Western sanctions.

“Any technical difficulties linked to this are caused by those restrictions that European countries introduced themselves,” Kremlin spokesman Dmitry Peskov told reporters.

Russian President Vladimir Putin insisted this week that Gazprom would meet all its delivery obligations.

“Gazprom has fulfilled, is fulfilling and will fulfil its obligations in full,” Putin told reporters in Tehran after holding talks with the leaders of Iran and Turkey.

He warned, however, that as another gas turbine was due to be sent for maintenance at the end of this month, energy flows could fall to 20 per cent of capacity from next week.

– ‘Blackmail’ –

As of Wednesday, German gas reserves were about 65 per cent according to official estimates. The reduced supply has prevented EU countries from replenishing holdings before winter.

The European Commission on Wednesday urged EU countries to reduce their demand for natural gas by 15 per cent over the coming winter months and to give it special powers to force through needed demand cuts if Russia severs the gas lifeline.

“Russia is blackmailing us,” Commission president Ursula von der Leyen, a former German defence minister, told reporters.

“Russia is using energy as a weapon and therefore, in any event, whether it’s a partial major cut-off of Russian gas or total cut-off… Europe needs to be ready.”

Peskov at the Kremlin said on Thursday that the blackmail accusations were “completely” unfounded.

German Economy Minister Robert Habeck, who has said he is taking shorter showers to save energy, stressed that industry — but also consumers — would have to do their part to reduce Russia’s power in the current standoff.

“A decisive bit of leverage is reducing gas use,” he said. “We have to do everything in our power to work on that.”

-AFP

Austria Makes Emergency Plan To Cut Russian Gas Dependency

Map of Austria

 

Austria on Wednesday presented an emergency plan to reduce its reliance on Russian gas over potential supply cuts from Moscow as tensions soar over the war in Ukraine.

Under the plan, the country aims to reduce the share of gas it consumes from Russia from 80 to 70 percent of the total.

“The measures will strongly reduce our dependence on Russian gas,” Energy and Climate Action Minister Leonore Gewessler told reporters.

For the first time, the government will build a strategic reserve with non-Russian gas accessible to all industries, which would cover total consumption for two months in the winter.

It will also bar storage facilities from remaining empty.

Storage facilities of Russian energy giant Gazprom in Haidach, near Salzburg, are empty.

Gewessler said it was “no longer acceptable” for Gazprom’s subsidiary, GSA, to not stock up.

Other suppliers will have access to the facilities “if Gazprom does nothing”, Gewessler added. “It is absolutely justified.”

The European Union is aiming to slash its reliance on Russian gas by two thirds this year, but it has been reluctant to ban it outright as countries such as Germany depend on Russian supplies and fear that it would damage their economies.

The Haidach reservoirs are linked to the German gas network, but it will now be attached to the Austrian network to ensure domestic clients get supplies, she said.

Austrian gas storage is at 26 percent capacity, and the goal is to reach 80 percent before the next heating season, the government said.

The measures must be adopted by a two-third majority of lawmakers in the coming days.

Italy Chases African Gas To End Dependence On Russia

This picture shows installations at the Tunisian Sergaz company, that controls the Tunisian segment of the Trans-Mediterranean (Transmed) pipeline, through which natural gas flows from Algeria to Italy, in El-Haouaria, some 100km east of the capital Tunis, on April 14, 2022.
FETHI BELAID / AFP

 

Italian ministers headed to central Africa Wednesday in an urgent quest for new energy deals as Italy scrambles to break away from Russian gas over the Ukraine war.

Prime Minister Mario Draghi is looking to add Angola and the Congo Republic to a portfolio of suppliers to substitute Russia, which provides about 45 percent of Italian gas.

“We do not want to depend on Russian gas any longer, because economic dependence must not become political subjection,” he said in an interview with the Corriere della Sera daily published on Sunday.

“Diversification is possible and can be implemented in a relatively short amount of time — quicker than we imagined just a month ago,” he said.

Draghi was due to go himself but after testing positive for Covid-19, sent Foreign Minister Luigi Di Maio and Ecological Transition Minister Roberto Cingolani in his place.

They were due to arrive in Luanda on Wednesday evening, before heading to Brazzaville on Thursday, accompanied by Claudio Descalzi, chief executive of Italian energy giant ENI.

“This is a race against time to make sure we stock gas and oil for the next winter season,” said Francesco Galietti, head of Rome-based consultancy Policy Sonar.

In Angola, the ministers were due to meet with President Joao Lourenco — who also spoke by telephone Wednesday with Draghi — before signing a “declaration of intent” on energy cooperation, officials on both sides said.

A similar declaration will be signed in the Republic of Congo following talks with President Denis Sassou Nguesso, Italy’s foreign ministry said.

The foray follows the signing of agreements with Algeria and Egypt in recent weeks.

Algeria is currently Italy’s second-largest supplier, providing around 30 percent of its consumption.

ENI said the deal with Algeria’s Sonatrach would boost deliveries of gas through the Transmed undersea pipeline by “up to nine billion cubic meters per year” by 2023-24.

Transmed only had a spare pipeline capacity of 7.8 billion cubic metres per year in 2021 — though it has said it is ready to expand.

Italy has also been in talks with Azerbaijan over the expansion of the Trans-Adriatic Pipeline (TAP).

 ‘Fanciful’

The Egypt accord could result in up to three billion cubic meters of liquefied natural gas (LNG) bound to Europe and Italy, in particular, this year, ENI said.

Italy is looking into buying or renting two floating storage and regasification units (FSRU) to allow it to import more LNG.

Diversification will not be cheap, warn experts, who foresee extra taxes passed on to businesses and families.

Davide Tabarelli, head of energy think tank Nomisma Energia, said Rome was rightly exploiting the “excellent relationships” that ENI has built up over 69 years in Africa, where it is the sector leader in terms of production and reserves.

But the idea of replacing Russian gas “in the short term” was “fanciful”, he told AFP. “It will take at least two or three years.”

The government said it expects to get the floating regasification units into place within 18 months.

It has also talked of kick-starting stalled projects for two onshore regasification plants, which would take some four years to build.

 ‘Operation thermostat’

Italy is one of Europe’s biggest guzzlers of gas, which currently represents 42 percent of its energy consumption, and it imports 95 percent of the gas it uses.

The government hopes to reduce that by accelerating the investment in renewables and has vowed to cut red tape on wind and solar farms.

Draghi has called for a collective sacrifice, asking Italians this month: “Do we want to have peace or do we want to have the air conditioning on?”

His rallying cry was met with some grumbling in a country feeling the effects of global heating, which science shows is driven by the human burning of fossil fuels.

Undeterred, the government is readying the so-called “operation thermostat”, which could see the public sector turn down heating in schools and offices by one degree, and the equivalent for air conditioning in the summer.

The rule would apply to private households and companies too, though it would be difficult to police.

It could save some four billion metric cubes of natural gas a year — or around 14 percent of the total gas imported from Russia, according to La Stampa newspaper.

AFP

Gas Prices ‘In God’s Hands’, Producers Warn As Ukraine Crisis Sparks Surge

The MV Epic St George LNG (liquid natural gas tanker) passes the Esso Oil refinery in Fawley, near Southampton, southern England on October 4, 2021. (Photo by Adrian DENNIS / AFP)

 

Major gas exporting nations said Tuesday they could not guarantee prices or supplies at a summit overshadowed by the worsening Ukraine crisis which has pushed costs to record highs in Europe.

Qatar’s emir, who hosted the talks, said gas producers were working to ensure “credible and reliable” supplies, on the same day as Europe’s concerns over deliveries from Russia were further hit by Germany’s decision to halt the Nord Stream 2 pipeline project.

The Gulf state’s energy minister said his country would help Europe as much as possible, but that the unprecedented prices paid by Europe’s consumers were “in God’s hands”.

Leaders and ministers from the 11-member Gas Exporting Countries Forum met after Russian President Vladimir Putin formally recognised two breakaway regions of Ukraine as independent and sent in troops. Germany responded by freezing the huge gas pipeline from Russia.

With Russia a key member of the exporters’ forum, the Ukraine crisis was not mentioned in talks, officials said, or the final statement.

Russia’s Energy Minister Nikolay Shulginov made no reference to the tensions but he told the forum that “Russian companies are fully committed to existing contracts” for gas supplies.

READ ALSO: Pope Warns Of ‘Increasingly Alarming Scenarios’ In Ukraine

The United States has asked Qatar to help Europe if Russian supplies are cut, but its Energy Minister Saad Sherida al-Kaabi said his country could not rescue Europe alone.

Russia accounts for about 40 percent of the European market and Qatar five percent.

It would be “virtually impossible” for one country to replace that amount of gas, Kaabi told a news conference. Qatar’s supplies are also tied up in long-term contracts, many with Asian countries including Japan, South Korea and China.

“We are supportive of the European Union and we are ready to supply whatever is possible from our side and the volume that will be available while abiding by contracts,” Kaabi said.

The minister estimated that 10-15 percent of shipments under Qatar’s long-term contracts could potentially be diverted.

But he insisted that the record prices in Europe had their roots in a lack of investment before the Ukraine crisis.

– ‘Preserve stability of markets’ –

Qatar and other producer nations want long-term contracts of up to 25 years to “underpin” the huge investments made in extracting, processing and transporting gas.

“Everything that is going on today in pricing is fundamentally because of a lack of investments and that will take time to catch up,” Kaabi said.

Asked whether European consumers would have to pay more because of the Ukraine crisis, he said: “Predicting how prices will be, (whether they) will go up or down, that is in God’s hands not mine.”

The summit statement made no mention of increasing supplies and instead stressed the “fundamental role” of long-term contracts and linking gas prices to oil values to bolster investment.

But Qatar’s emir, Sheikh Tamim bin Hamad Al-Thani, said forum countries were “working hard to ensure a credible and reliable supply of natural gas to world markets and preserve the stability of those markets”.

The emir said the forum wanted more intense talks with gas importers “to ensure the security of natural gas supplies and the stability of global gas markets”.

Even before the sharp rise in energy prices over the past year, major gas-producing nations had said they needed long-term contracts to guarantee supplies to consumers.

The European Union has until recently resisted the 10-, 15- and 20-year contracts typical in the industry. Qatar and others say long-term deals are necessary to cover the massive investment needed to increase production.

The summit was also attended by presidents and prime ministers from Algeria, Iran, Mozambique, Equatorial Guinea and Trinidad and Tobago.

Iran’s President Ebrahim Raisi said his country wanted to increase production and exports but was being held back by what he called “cruel and unnatural” US sanctions against his country.

Major powers are negotiating with Iran to revive an accord regulating its controversial nuclear programme that could provide relief from the crippling sanctions.