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Thursday October 6th, 2022 7:05PM

Russia reduces natural gas through European pipeline again

By The Associated Press
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BERLIN (AP) — Russia's Gazprom announced a reduction in natural gas flows through a key European pipeline for the second day in a row Wednesday, creating further energy turmoil for a continent as it ties to reduce its extensive use of Russian oil and natural gas amid the war in Ukraine.

The state-owned energy giant said on Twitter that deliveries through the Nord Stream 1 pipeline to Germany would be cut again Thursday, bringing the overall reduction through the undersea pipeline to 60%.

The drop in shipments of gas used to power industry and generate electricity would amount to some 16 billion cubic meters by the end of the year, or around 10% of total European Union gas imports from Russia, according to Simone Tagliapietra, an energy policy expert at the Bruegel think tank in Brussels.

The new cut came a day after Gazprom said it would reduce flows by 40% after Canadian sanctions over the war prevented German partner Siemens Energy from delivering overhauled equipment. It blamed the same issue for the additional reduction.

German Vice Chancellor Robert Habeck earlier Wednesday said Gazprom's initial move appeared to be political rather than a result of technical problems. He said the new developments “clearly show the Russian side’s explanation is simply an excuse.”

“Obviously the strategy is to unsettle people and push up prices,” he said in a statement.

Gazprom also told Italian gas giant Eni that it would reduce gas through a different pipeline by roughly 15% on Wednesday. The reason for the reduction has not been made clear, and the Italian company said it was monitoring the situation.

The reduced flows to two of Europe's biggest importers of Russian natural gas follow the country's previous halt of gas supplies to Bulgaria, Poland, Finland, Netherlands, Denmark. Europe is working to reduce its dependence on Russian energy as the war worsens rising oil and gas prices that are fueling record inflation. Gas demand has fallen after the end of the winter heating season, but European utilities are racing to refill storage ahead of next winte r with prices high and supplies uncertain.

While gas storage is refilling well, the cutoffs and reductions come on top of an explosion at a liquefied natural gas terminal in Texas whose exports were largely going to Europe, adding another squeeze to the tight natural gas market, said Simone Tagliapietra, an energy expert at the Bruegel think tank in Brussels. He urged Europe “not to be complacent and urgently scale-up coordination" so the continent is “prepared for a possibly difficult winter ahead."

Siemens Energy said after Tuesday's initial announcement about Nord Stream 1 that a gas turbine that powers a compressor station on the pipeline had been in service for more than 10 years and taken to Montreal for a scheduled overhaul. But because of sanctions imposed by Canada, the company has been unable to return the equipment to the customer, Gazprom.

Habeck, who is also Germany's economy minister and responsible for energy, told reporters in Berlin that he had established with the European Union's executive Commission that the maintenance of Siemens compressor stations on the pipeline isn't subject to EU sanctions.

He said officials are in contact with Canada to check what is possible under Ottawa's sanctions. But he added that, as far as German officials know, the first “relevant” maintenance session isn't due until the fall, and because there are several such installations, that wouldn't explain a 40% reduction.

“So I also have the impression that what happened yesterday is a political decision, and not a decision that is technically justifiable,” Habeck said. “What effect it has on the European and German gas market, we will have to wait and see. As a rule, suppliers have always succeeded in getting hold of gas from other sources.”

He said there's no supply problem in Germany, which gets about 35% of its natural gas to power industry and generate electricity from Russia, and it should be able to keep filling up reserves.

Habeck said after Gazprom's second announcement that the missing gas can be obtained on the market, “if at high prices."

The EU has outlined plans to reduce dependence on Russian gas by two-thirds by year’s end. Economists say a complete cutoff would deal a severe blow to the economy, consumers and gas-intensive industries.

“If you have the feeling that all your homework is done and everything is going well, you're wrong,” Habeck said. “It isn't over yet. It may only just be beginning ... making ourselves independent from fossil energy and Russian fossil energy must be advanced at high pressure.”

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AP reporter Nicole Winfield in Rome contributed.

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Follow the AP’s coverage of the war at https://apnews.com/hub/russia-ukraine

  • Associated Categories: Associated Press (AP), AP World News, AP Business, AP Business - Industries, AP Business - Utilities
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