It’s not a summer heat wave that’s making European leaders and businesses sweat. It’s fear that Russia’s manipulation of natural gas supplies will lead to an economic and political crisis next winter. Or, in the worst case, even sooner.
Here are key things to know about the energy pressure game over the war in Ukraine:
Russia last week reduced gas supplies to five European Union countries, including Germany, the 27-country bloc’s biggest economy that heavily depends on Moscow’s gas to generate electricity and power industry.
Russian state-owned energy giant Gazprom has cut supplies through the Nord Stream 1 pipeline running under the Baltic Sea from Russia to Germany by 60% — Europe’s major natural gas pipeline. Italy is seeing its supply cut by half. Austria, the Czech Republic and Slovakia also have seen reductions.
This comes on top of gas shutoffs to Poland, Bulgaria, Denmark, Finland, France and the Netherlands in recent weeks. Those shutoffs were initially seen as less of a problem because Poland, for instance, was already phasing out Russian gas by year’s end, while others had alternative supplies.
The latest cutbacks, however, hit countries that are major economies and use lots of Russian natural gas. Germany relies on Russia for 35% of its gas imports; Italy for 40%. Right now, gas supplies are enough for current needs.
WHY ARE THE REDUCTIONS A CONCERN?
Europe is scrambling to fill its underground gas storage ahead of the winter. Gas utilities operate on a regular rhythm, filling reserves over the summer — when, hopefully, they can buy gas cheaper — and then drawing it down over the winter as heating demand rises. The reductions will make refilling storage more expensive and difficult to accomplish.
The move also has brought closer the specter of a complete Russian gas shutoff that would make it impossible for Europe to get all the fuel it needs for the winter. Natural gas is used by several energy-intensive industries, such as glassmakers and steel manufacturers, that are already facing higher costs and dialing back use, helping slow the European economy.
For electricity production, gas is the “swing” energy source that kicks in when renewables like wind and sun generate less power due to unpredictable weather and when electricity use spikes during cold or hot weather, like the heat wave last weekend that spurred record highs in Europe.
Right now, Europe’s underground storage caverns are 57% full. The European Commission’s latest proposal is for each country to reach 80% by Nov. 1, while Germany has set goals of 80% by Oct. 1 and 90% by Nov. 1.
Analysts at the Bruegel think tank in Brussels warn that “Bulgaria, Hungary and Romania will not meet the EU 80% target if they continue at the current speed,” while “Germany, Austria and Slovakia will find it very difficult to fill their storage facilities if gas flows from Russia are stopped.”
WHAT’S BEING DONE?
The EU, which before the war got some 40% of its …read more
Source:: Politics Headlines
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