June 26, 2022

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Russian gas flows to Europe plummet, hampering attempt to refill stores

Russian gas flows to Europe plummet, hampering attempt to refill stores

A train passes through oil tanks at the NNK-Primornefteproduct petroleum depot in the port of Vladivostok in Russia’s Far East, June 11, 2022. REUTERS / Tatiana Mill

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  • Nord Stream 1 pipeline capacity reduced by 40%
  • Gas price in Europe jumped by as much as 30% after news of unrest
  • Gazprom blames equipment cuts for equipment delays from Canada
  • Freeport LNG terminal in the US is offline until September

LONDON (Reuters) – Russian gas supplies to Europe through the Nord Stream 1 pipeline slumped on Thursday and Moscow said further delays in repairs could halt all flows, limiting Europe’s race to refill its gas stocks.

The faltering flows come as the leaders of Germany, Italy and France are visiting Ukraine, which has been pressing for faster deliveries of arms to fight invading Russian forces and wants to support Kyiv’s bid to join the European Union. Read more

Russia’s state-controlled Gazprom said it has reduced gas supplies for the second time in as many days via Nord Stream 1, which runs under the Baltic Sea to Germany. The last step cuts supplies to only 40% of the pipeline’s capacity.

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Kremlin spokesman Dmitry Peskov said the supply cuts were not premeditated and related to maintenance issues, referring to earlier comments that Russia was unable to secure the return of equipment sent to Canada for repairs. Read more

Germany said Russia’s argument was technically “unfounded” and aimed instead at raising gas prices. Read more

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Wholesale gas prices in the Netherlands, the European standard, jumped about 30% on Thursday afternoon.

Russia’s ambassador to the European Union told the official RIA Novosti news agency that flows through the pipeline could be completely halted due to problems with turbine repair in Canada.

Alexey Miller, CEO of Gazprom, the state-controlled company that monopolizes Russian gas exports through the pipeline, said Western sanctions have made it impossible to secure the return of equipment from Canada for the Portovaya compressor station of the pipeline. Read more

Europe races to refill storage

Nord Stream 1 has the capacity to pump about 55 billion cubic meters annually to the European Union, which last year imported about 140 billion cubic meters of gas from Russia via pipelines.

Germany, like other European countries, is racing to refill its gas storage facilities so that they are 80% full by October and 90% by November before winter sets in. Stores are 52% full now.

The head of Germany’s energy regulator said cutting off flows through Nord Stream 1 would make this task more difficult.

“Maybe we can spend the summer with the heating season over. But it is necessary to fill the storage facilities to get through the winter,” Klaus Muller told Thursday’s daily Rheinische Post.

Uniper (UN01.DE)The largest importer of Russian gas to Germany said that supplies fell by a quarter compared to the agreed quantities, but it may fill the lost quantities from other sources. RWE Energy Product (REWEG.DE) She said she has seen restrictions in the past two days.

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The European Union aims to ensure that gas storage facilities across the 27-nation bloc are 80% full by November. But other European countries are also facing dwindling Russian supplies. Read more

SPP, Slovakia’s state-owned gas import company, said it expected to reduce Russian gas shipments on Thursday by about 30 percent, while the Czech energy utility CEZ (CEZP.PR) She said she had seen a similar decline but was filling the gap from other sources.

Draw contingency plans

OMV Austria (OMVV.VI) France’s Engy said Gazprom had informed her of the reduction in delivery (ENGIE.PA) Italy’s Eni said inflows fell, but customers were not affected (ENI.MI) It said it would receive 65% of the quantities it ordered from Gazprom.

The Italian government said that all possible measures are in place to deal with the situation if gas supplies from Russia continue to be cut off in the coming days. Other European countries have also drawn up contingency plans.

Adding to the challenge, Nord Stream 1 will be completely shut down during the pipeline’s annual maintenance on July 11-21.

Norway, Europe’s second largest exporter after Russia, is ramping up production to help the European Union achieve its goal of ending dependence on Russian fossil fuels by 2027.

Centrica Britain (CNA.L) Signed a deal with the Norwegian Equinor (EQNR.OL) for additional gas supplies to the UK for the next three winters. Britain is not dependent on Russian gas and can also export to Europe via pipelines.

European countries have also boosted LNG imports, but Europe has limited LNG import capacity, and the already narrow LNG market has faced additional challenges with disruptions to US LNG production. Read more

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A fire last week at a US LNG export plant in Texas, operated by Freeport LNG, means the plant will be out of service until September, and will only operate partially from then until the end of 2022.

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

“There is a risk of further delay, in our view,” analysts at investment bank Jefferies said, adding that regulators needed to agree to restart while two investigations into the cause of the LNG leak at the plant were still underway.

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(Reporting by Reuters, Giuseppe Fonte in Rome, Alexandra Schwartz-Gurlich in Vienna, Jan Lopatka in Prague, Madeleine Chambers in Berlin, Nina Chestney in London; writing by Nina Chestney; Editing by Jason Neely and Edmund Blair

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