News ID: 323128
Published: 0259 GMT July 26, 2022

Europe agrees compromise gas curbs as Russia squeezes supply

Europe agrees compromise gas curbs as Russia squeezes supply
DADO RUVIC/ILLUSTRATION/REUTERS

European Union countries approved a weakened emergency plan to curb their gas demand on Tuesday, after striking compromise deals to limit the cuts for some countries, as they brace for further Russian reductions in supply.

Europe faces an increased gas squeeze from today, when Russian's Gazprom has said it would cut flows through the Nord Stream 1 pipeline to Germany to a fifth of capacity, Reuters reported.

With a dozen EU countries already facing reduced Russian supplies, Brussels is urging member states to save gas and store it for winter for fear Russia will completely cut off flows in retaliation for Western sanctions over its military operation in Ukraine.

Energy ministers approved a proposal for all EU countries to voluntarily cut gas use by 15% from August to March.

The cuts could be made binding in a supply emergency, but countries agreed to exempt numerous countries and industries, after some governments had resisted the EU's original proposal to impose a binding 15% cut on every country.

Hungary was the only country that opposed the deal, two EU officials said.

Russia's Gazprom has blamed its latest reduction on needing to halt the operation of a turbine – a reason dismissed by EU energy chief Kadri Simson, who called the move "politically motivated".

Russia, which supplied 40% of EU gas before the Ukraine war, has said it is a reliable energy supplier.

The EU deal would exempt from the binding 15% gas cut countries such as Ireland and Malta that are not connected to other EU countries' gas networks.

News of the latest reduction to Russian supply has driven gas prices higher, adding to the cost of filling storage, while creating incentives to use less.

Early on Tuesday, the benchmark front-month Dutch contract rose almost 10% and is more than 450% higher than a year ago, although down from record highs touched shortly after Russia began its military operation in Ukraine.

Countries that meet an EU target for filling gas storage by August could face weaker targets – softening the cuts for roughly a dozen states, including Germany and Italy, based on current storage levels.

They can also exempt the gas they use in critical industries, such as energy-intensive steelmaking, from the target.

In addition, those with a limited ability to export gas to other EU countries can request a lower target, provided they export what they can.

Some EU diplomats raised concerns that the number of opt-outs in the final regulation may mean it fails to ensure countries save enough gas for winter.

Although governments including Germany, Europe's biggest gas user, have upped their energy saving measures, EU countries have reduced their combined gas use by only 5%, despite months of soaring prices and dwindling Russian supplies.

 

 

 

 

   
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