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Russia is cutting back on gas flows, while Europe is struggling to catch up on winter

Written by Javed Iqbal

Germany’s largest natural gas storage chamber extends under a piece of agricultural land the size of nine football pitches in the western part of the country. The countryside has become a kind of battlefield in Europe’s efforts to defend itself against a looming gas crisis driven by Russia.

Since last month, the German government has been rapidly pumping fuel into the vast underground area of ​​Rehden in hopes of filling it in time for winter, when demand for gas rises to heat homes and businesses.

The scene is repeated at warehousing facilities across the continent, in a battle over energy between Europe and Russia that has escalated since Moscow’s invasion of Ukraine in February.

In the latest sign that Moscow looks set to punish Europe for sanctions and military aid to Ukraine, Gazprom, Russia’s state-controlled energy giant, last week cut 60 percent of the amount of gas it supplies via Nord Stream 1, a critical pipeline serving Germany and other countries. It is not clear whether the throttling is a precursor to a complete cutoff.

On Thursday, Germany triggered the second phase of its three-stage emergency gas plan, citing a deterioration in its natural gas supply. The final phase could include gas rationing. “Even if you do not feel it yet: We are in a gas crisis. Gas is in short supply from now on, “said Robert Habeck, Minister of Economic Affairs.

Russia’s efforts have increased efforts in Germany, Italy and elsewhere to build up gas reserves. in a decisive effort to moderate stratospheric prices, reduce Moscow’s political leverage and avert the possibility of shortages this winter. Gazprom’s actions have also forced many countries to loosen their restrictions on coal-fired power plants, a major source of greenhouse gases.

“If the storage facilities are not filled before the end of the summer, the markets will interpret it as a warning of price increases or even energy shortages,” said Henning Gloystein, director of Eurasia Group, a political risk firm.

Gas prices are already extraordinarily high, about six times what they were a year ago. Germany’s finance minister, Christian Lindner, has warned that the persistently high energy costs threatened to plunge Europe’s largest economy into an economic crisis, and the government has urged consumers and businesses to save on gas.

“There is a risk of a very serious economic crisis due to the sharp rise in energy prices, due to supply chain problems and due to inflation,” Lindner told ZDF public television on Tuesday.

The stage was set for an energy crisis last year. A cold moment in late winter eroded gas reserves, and Gazprom stopped selling supplies beyond its contractual obligations. Gazprom-owned storage facilities in Germany, including the massive underground chamber in Rehde, taken by the German government Control of in April, was allowed to shrink to almost empty.

To avoid a repeat of last year and to safeguard against supply disruptions, in May the EU agreed to require Member States to fill their storage facilities to at least 80% of capacity by 1 November. So far, the countries are making good progress towards this goal with overall European stock levels of 55 percent.

The giant plant in Rehden is more than 12 percent full, but Germany, Europe’s largest gas consumer, has reached an overall level of 58 percent – both well above the levels this time last year. Other major gas users, including France and Italy, have stores at similar levels, while Spain has more than 77 per cent.

But while inventory levels continue to rise, Gazprom’s cuts put those targets in doubt and threaten a crisis next winter, analysts say.

If Nord Stream were shut down completely, “Europe could run out of gas supplies in January,” said Massimo Di Odoardo, vice president of gas research at Wood Mackenzie, a consulting firm.

Gazprom has blamed the cuts on a pipeline section that was sent for repair and had not returned in time. But European leaders have flatly rejected this argument, and a German regulator said it saw no indication of how a mechanical problem could result in such falls.

Sir. Habeck on Thursday blamed the Russian president for the cuts and called them an “economic attack” by Vladimir V. Putin. “It is clearly Putin’s strategy to create uncertainty, drive up prices and divide us as a society,” he said.

The fight succeeds. European gas futures have risen about 50 percent over the past week.

The reduction in supplies to the German pipeline, which also affected flows to other European countries, including France, Italy and the Netherlands, shattered any remaining hope among European leaders that they could count on Russian gas, perhaps the most difficult fuel to replace.

“It is now clear that the contracts we have with Gazprom are no longer worth anything,” said Georg Zachmann, a senior fellow at Bruegel, a research institution in Brussels. Analysts say Moscow is likely to continue to use gas for maximum leverage and do what it can to put a stop to Europe’s efforts to replenish stocks, to keep prices high and increase countries like Germany and Italy’s vulnerability to political pressure over energy.

In recent days, the governments of Germany, the Netherlands and Austria have all taken steps to try to save gas, in part by addressing coal-fired power plants which had either been closed or was planned for phasing out. The measures have raised concerns that the EU’s efforts to achieve net-zero greenhouse gas emissions by 2050 will be derailed.

Bringing coal back sends a signal “that is inconsistent with environmental rhetoric in recent years,” said Tim Boersma, director of global natural gas markets at Columbia University’s Center for Global Energy Policy.

The government of the Netherlands continues to resist calls from some quarters to increase production in Groningen, a huge gas field being shut down because production there has caused earthquakes.

In Berlin, Chancellor Olaf Scholz has refused to consider keeping the country’s three nuclear power plants online. The reactors are scheduled to shut down at the end of the year as part of the country’s efforts to stop using nuclear energy.

Two years ago, Germany decided to phase out coal-fired power plants by 2038 in its mission to be carbon-free by 2045. But last week, Mr Habeck, a member of the Greens, announced that the government would be carbon-free by 2045. to temporarily reverse these efforts in response to gas reductions.

For RWE, a major energy supplier in Germany, the turnaround means a postponement of three plants that were to shut down in September. The plants burn soft coal or lignite, the dirtiest form of the fuel. The company is now struggling to find enough employees to keep the facilities running.

The change would require a workforce of “several hundred jobs,” said Vera Bücker, a spokeswoman for RWE. Some of them will be completed by postponing plans for employees to retire early, while others will be new hires for jobs that are scheduled to be completed in the first part of 2024 when the regulation expires.

The face of coal is a challenge for energy providers, who focused on the transition to natural gas as a bridge to renewable energy sources. Now they have to find new coal sources and override plans to reduce CO2 emissions.

“How much carbon dioxide we emit will depend on how long our plants will run,” said Markus Hennes, a spokesman for Steag, which operates several coal-fired plants in western Germany. “But our emissions will increase. That is clear.”

More worrying for some environmentalists, Germany and other European countries are moving fast to build terminals to receive liquefied natural gas as an alternative to Russian gas.

On Tuesday, EnBW, a German utility, signed a 20-year deal beginning in 2026 with Venture Global, a U.S. liquefied natural gas supplier. In other words, Germany will import gas until 2046 under this scheme.

“We risk locking ourselves into a new era of fossil fuels,” said Mr Zachmann of Bruegel.

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Javed Iqbal

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