Russia deepens Europe’s vitality squeeze with new fuel halt


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  • Outage for upkeep on Nord Stream 1 pipeline
  • No flows to Germany 0100 GMT, Aug. 31 – 0100 GMT, Sept. 3
  • European governments concern Moscow might prolong the outage
  • German regulator: we’re saving fuel, should preserve doing so
  • Siemens Power: not concerned in upkeep work

FRANKFURT/LONDON, Aug 31 (Reuters) – Russia halted fuel provides by way of Europe’s key provide route on Wednesday, intensifying an financial battle between Moscow and Brussels and elevating the prospects of recession and vitality rationing in a number of the area’s richest international locations.

European governments concern Moscow might prolong the outage in retaliation for Western sanctions imposed after it invaded Ukraine and have accused Russia of utilizing vitality provides as a “weapon of warfare”. Moscow denies doing this and has cited technical causes for provide cuts.

Russian state vitality big Gazprom (GAZP.MM) stated Nord Stream 1, the most important pipeline carrying fuel to its high buyer Germany, shall be out for upkeep from 0100 GMT on Aug. 31 to 0100 GMT on Sept. 3. learn extra

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The president of the German community regulator stated that Germany would be capable of address the three-day outage so long as flows resumed on Saturday.

“I assume that we will address it,” Klaus Mueller instructed Reuters TV in an interview. “I belief that Russia will return to a minimum of 20% from Saturday, however nobody can actually say.”

Additional restrictions to European fuel provides would deepen an vitality crunch that has already triggered a 400% surge in wholesale fuel costs since final August, squeezing customers and companies and forcing governments to spend billions to ease the burden. learn extra

In Germany, inflation soared to its highest in virtually 50 years in August and shopper sentiment soured as households brace for a spike in vitality payments. learn extra

LOWER SUPPLIES

In contrast to final month’s 10-day upkeep for Nord Stream 1, the most recent work was introduced lower than two weeks upfront and is being carried out by Gazprom moderately than its operator.

Moscow, which slashed provide by way of the pipeline to 40% of capability in June and to twenty% in July, blames upkeep points and sanctions it says stop the return and set up of apparatus.

Kremlin spokesman Dmitry Peskov stated on Wednesday that Russia remained dedicated to its fuel provide obligations, however was unable to fulfil them as a result of sanctions, in line with the Interfax information company.

Gazprom stated the most recent shutdown was wanted to carry out upkeep on the pipeline’s solely remaining compressor on the Portovaya station in Russia, saying the work could be carried out collectively with Siemens specialists.

Pipes on the landfall amenities of the ‘Nord Stream 1’ fuel pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke/File Photograph

Siemens Power (ENR1n.DE), which has carried out upkeep work on compressors and generators on the station previously, stated on Wednesday it was not concerned within the upkeep however stood able to advise Gazprom if wanted. learn extra

Russia has additionally stopped supplying Bulgaria, Denmark, Finland, the Netherlands and Poland, and decreased flows by way of different pipelines since launching what Moscow calls its “particular navy operation” in Ukraine. learn extra

Gazprom stated on Tuesday it might additionally droop fuel deliveries to its French contractor due to a funds dispute, which France’s vitality minister referred to as an excuse, however added that the nation had anticipated the lack of provide. learn extra

German Financial system Minister Robert Habeck, on a mission to switch Russian fuel imports by mid-2024, earlier this month stated Nord Stream 1 was “totally operational” and there have been no technical points as claimed by Moscow.

‘ELEMENT OF SURPRISE’

The decreased flows by way of Nord Stream have sophisticated efforts throughout Europe to avoid wasting sufficient fuel to make it by the winter months, when governments concern Russia might halt flows altogether.

“It’s one thing of a miracle that fuel filling ranges in Germany have continued to rise nonetheless,” Commerzbank analysts wrote, noting the nation has to this point managed to purchase sufficient at greater costs elsewhere.

Within the meantime, some Europeans are voluntarily reducing their vitality consumption, together with limiting their use {of electrical} home equipment and showering at work to economize whereas firms are bracing for doable rationing. learn extra

With storage tanks stuffed in 83.65%, Germany is already near its 85% goal set for Oct. 1, but it surely has warned reaching 95% by Nov. 1 could be a stretch until firms and households slash consumption.

European Union as an entire reached 80.17% of its storage capability, already forward of the 80% goal set for Oct. 1, when the continent’s heating season begins.

Analysts at Goldman Sachs stated their base state of affairs was that the most recent Nord Stream 1 outage wouldn’t be prolonged.

“If it did, there could be no extra ingredient of shock and decreased revenues, whereas low flows and the occasional drop to zero have the potential to maintain market volatility and political stress on Europe greater,” they stated.

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Reporting Nina Chestney and Christoph Steitz; Extra reporting by Matthias Inverardi, Bharat Govind Gautam and Eileen Soreng; Modifying by Veronica Brown, Carmel Crimmins, Lincoln Feast and Tomasz Janowski

Our Requirements: The Thomson Reuters Belief Ideas.

Nina Chestney

Thomson Reuters

Oversees and coordinates EMEA protection of energy, fuel, LNG, coal and carbon markets and has 20 years’ expertise in journalism. Writes about these markets in addition to local weather change, local weather science, the vitality transition and renewable vitality and funding.



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