PARIS—European manufacturers are preparing for possible natural-gas rationing that would force them to shut production amid fears that Russia is about to cut off gas deliveries via its main artery to Europe.
On Monday the Nord Stream pipeline, which runs 760 miles from northwest Russia under the Baltic Sea to Germany, will go into annual maintenance for 10 days, repairs that are routine in peaceful times. European officials say that Moscow, which has already cut gas deliveries to 40% of the pipeline’s capacity, might not bring it back online.
The Kremlin says it plans to continue supplying gas through the pipeline once the maintenance is complete and that any disruptions are the fault of Western sanctions that it says have blocked delivery of a turbine for the pipeline that is being repaired in Canada. European capitals, however, say Moscow is wielding its gas supply as a weapon, reducing the pipeline’s deliveries last month in retaliation for their support of Ukraine.
Canada on Saturday said it would send the turbine to Germany after weeks of discussions with the German government. Berlin wants to return it to Russia, saying the move would show that Moscow has been using the turbine as an excuse for a political decision to cut gas deliveries to Europe.
Europe has enough gas for now, but the region’s manufacturers are bracing for a winter without Russian supplies. Some, needing chemicals for production that are made with natural gas, are looking to import them from regions outside Europe where the fuel is more plentiful. Others are planning to switch from natural gas to other fuels where they can. And some producers fear they would have no choice but to shut down completely.
“There are no easy solutions if we get into a curtailment situation,” said Svein Tore Holsether, chief executive of Yara International AS A, the world’s largest fertilizer producer.
Europe was counting on Russian gas to stock up for the winter when consumption peaks. Without Russian deliveries, officials fear shortages could appear as temperatures fall. Since Russia invaded Ukraine in February, Europe has been buying record amounts of liquefied natural gas from the U.S. and other non-Russian exporters, but those deliveries may not be enough to replace Russian gas, which last year accounted for 40% of the European Union’s overall supply of the fuel.
Russian President Vladimir Putin on Friday warned the West against imposing further measures against Moscow.
“Sanctions restrictions against Russia cause much more damage to precisely those countries that impose them,” Mr. Putin said at a government meeting. “Further use of the sanctions policy could lead to even more severe, even catastrophic, consequences in the global energy market.”
Uniper SE, one of Europe’s largest utilities, on Friday requested a bailout from the German government after being hit hard by dwindling gas supplies from Russia. Uniper, which is Germany’s largest importer of Russian gas, has had to make up the difference in the spot market, paying higher prices for that gas. France, meanwhile, is moving to nationalize energy giant EDF SA, which has been losing billions of euros under a government-imposed cap on electricity prices.
The continent’s energy-intensive industries are discussing with governments whether they can reduce gas consumption to reserve scarce supplies for households when winter arrives.
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat.
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