September 28, 2022

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Europe tells countries to cut energy use as Putin tightens grip on gas

Europe tells countries to cut energy use as Putin tightens grip on gas

The European Commission is rolling out new measures so that member states are better prepared for winter, when their energy needs are highest. This comes at a time when Gazprom claims that it cannot fulfill gas contracts with Europe.

Sean Gallup | Getty Images News | Getty Images

European countries will It said They should quickly rein in their natural gas consumption as part of a broader plan to deal with declining supplies from Russia.

The European Commission, the European Union’s executive arm, is due on Wednesday to present a plan on how countries should prepare for the winter period, when their energy needs will be much higher.

The plan comes in the form of Russian energy giant Gazprom claims it cannot fulfill gas contracts with the bloc A major headache for European countries given that they were heavily dependent on Russian energy before the invasion of Ukraine.

An EU official, who asked not to be named because the plan is still being finalised, told CNBC on Monday that one of the proposal’s “most controversial” items were the gas cut targets.

Confirm details a Draft document seen by Financial TimesThe official added that this idea is likely to be controversial because different EU member states have different energy needs, which means, for example, that it is difficult for Germany, one of Russia’s largest energy importers, to reduce gas use by an amount. , for example 5% compared to Spain.

The European Commission declined to comment on the plan before it was published.

The Financial Times reported on Monday that Brussels will ask EU countries to cut gas consumption “immediately” and that gas cut targets will become mandatory in the event of severe disruption to gas flows.

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The European Union is preparing for the possibility of a complete shutdown of gas supplies from Russia in the wake of Moscow’s attack on Ukraine. However, the level of alert appears to be growing as fears grow that Russia will actually significantly reduce flows to Europe, or even end them altogether.

The Nord Stream 1 pipeline – a major transit point for Russian gas to Europe – has been closed for maintenance until July 21. However, many European officials are skeptical about bringing the flows back to full capacity.

Gazprom, the Russian energy giant, said on Monday that it could not fulfill gas contracts with Europe due to unforeseen circumstances. The German energy company Uniper rejected Gazprom’s argument.

This latest development added to earlier fears that Russia is nearing a complete shutdown of gas supplies to Europe next Flows have already fallen by 60% last month.

“Russia is intensifying the goods war against Europe by freezing gas supplies through Nord Stream 1,” Velina Chakarova, director of the Austria-based think tank AIES, told CNBC.

She added that this move by Russia “should be seen as a harbinger of a comprehensive gas ban before winter, as European storage capacities are not filled to the extent required, and governments of European countries that rely heavily on Russian gas supplies” will come under enormous economic pressure. “.

European economies are already facing a bleak economic outlook with inflation at record levels and growth suffering from persistent downward revisions. Much of this economic reality is due to the energy crisis, which was greatly exacerbated by the Russian war in Ukraine.

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The upcoming plan to prepare for winter comes as the commission is also ramping up gas deals with other parts of the world. On Monday, it announced a new deal With Azerbaijan and previously signed agreements with the United States.

The European Energy Commissioner, Kadri Simsun, said last June that the level of gas filling exceeded 56%, but some member states need to make more progress in the coming weeks to improve their energy levels. Back in March, the commissioner had requested a minimum storage target of 80% by November 1.