Russian gas to Europe in short supply as heatwave boosts demand

Content of the article

LONDON — Russian gas flows to Europe fell short of demand on Friday, coinciding with an early heatwave that gripped its south and pushed up benchmark prices already raised by fears the continent will struggle to accumulate storage in time for winter.

Italy and Slovakia said they received less than half of the usual volumes via the Nordstream 1 gas pipeline, which crosses the Baltic Sea from Russia to Germany and accounts for around 40% of Russian gas pipeline flows to the European Union .

Advertisement 2

Content of the article

France said it had not received Russian gas from Germany since June 15.

The German energy regulator described the situation as tense, but that German gas supplies were stable for now.

The EU’s dependence on Russian gas and the risk that Moscow could cut its supplies in retaliation for economic sanctions imposed after its invasion of Ukraine have been a headache for the bloc, prompting it to build up stocks and search for alternative supplies.

An unusually early heatwave in parts of Spain and France added to concerns, prompting more gas to be bought as demand for the electricity needed to power air conditioning rose.

Advertisement 3

Content of the article

Wholesale prices for Dutch gas, the European benchmark, have jumped and prices for electricity supply contracts have also increased across Europe.

Italy’s Eni said it would receive only half of the 63 million cubic meters per day it requested from Russia’s Gazprom on Friday, after experiencing a shortfall the previous two days.

Italian Prime Minister Mario Draghi, who traveled to Ukraine on Thursday with his French and German counterparts, accused Moscow of using its gas supplies for political purposes.

But Russia said the pipeline is delivering less gas to Europe due to the slow return of equipment made by German Siemens Energy that was sent to Canada for maintenance. Moscow must wait to see how the company and Canada will remedy the delay, Deputy Prime Minister Alexander Novak said on Friday.

Advertisement 4

Content of the article

Canada said earlier it was in talks with Germany to resolve the issue.


Italy could declare a state of gas alert next week if Russia continues to limit supplies, two government sources said, which would mean cutting gas consumption, rationing gas to industrial users and increasing the coal-fired electricity generation.

Across Europe, strong imports of liquefied natural gas boosted storage levels. Inventories for the whole of the EU are at 52% capacity, just below the five-year average and above the 43% seen a year ago, analysts at ING Research said.

If Gazprom restarts Nord Stream flows at full capacity, which is considered unlikely, Europe could theoretically fill storage sites to a target of 80% by November 1, said lead analyst Kateryna Filippenko. of the consulting firm Wood Mackenzie.

Advertisement 5

Content of the article

“But if Nord Stream continues to load at 45% capacity, or shuts down completely, Europe will only be able to partially fill storage – at 69% and 60% respectively,” she said. .

“If Gazprom continues to restrict flows, in either case, storage will run out through the winter, unless other demand or supply measures are taken, or Gazprom sends gas additional through reserved capacity available through Ukraine, although we believe this is highly unlikely,” she added.

With temperatures soaring, Spanish power plants bought more gas to generate electricity on Thursday than on any other day since records began, surpassing a milestone set the day before, the grid operator said. transport Enagas.

Gazprom could increase flows via Ukraine to compensate for the shortfall from Nord Stream, but there is no indication that it will do so yet. Additionally, flows through the Yamal-Europe pipeline have been flowing eastward for several months rather than the usual westward direction to Germany.

Advertising 6

Content of the article

Nord Stream 1 is also scheduled for annual maintenance which will stop all streams between July 11 and July 21.

The United States has been exporting LNG to Europe for months. But an explosion last week at an LNG export terminal in Texas will keep it idle until September and it will only partially operate by then until the end of 2022.

The facility, which accounts for about 20% of US LNG exports, has been a major supplier for European buyers.

(Reporting by Reuters, Nina Chestney in LONDON, Stine Jacobsen in COPENHAGEN, Nora Buli in OSLO, Maria Pia Quaglia in MILAN, Miranda Murray and Maria Sheahan in BERLIN, Isla Binnie in MADRID, Tom Kaeckenhoff in FRANKFURT, Jan Lopatka in Prague; Editing by Tomasz Janowski and Barbara Lewis)



Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. Visit our Community Rules for more information and details on how to adjust your E-mail settings.

Mary I. Bruner