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Compromise gas curbs get EU’s green light as Russia squeezes supply

A weakened emergency plan to curb national gas demand was approved by European Union countries on Tuesday – a move that followed compromise deals to reduce the cuts for some countries, as they brace for further Russian reductions in supply.

Since Wednesday, Europe has been facing a ramped-up gas squeeze, when Russia’s Gazprom said it turn the tap down on the Nord Stream 1 pipeline to Germany to a fifth of its capacity.

Today, the EU has taken a decisive step to face down the threat of a full gas disruption by Putin.

We strongly welcome the endorsement by @EUCouncil of the regulation to reduce by 15% gas consumption. This will help fill our storage ahead of winter.#REPowerEU

— European Commission 🇪🇺 (@EU_Commission) July 26, 2022

The possibility of Russia completely cutting off flows for winter in order to soften the EU up and retaliate for the West’s sanctions against Moscow over its invasion of Ukraine prompted Brussels to call on EU member states to stock up on gas. A dozen EU countries are already facing reduced Russian supplies.

I strongly welcome the endorsement by Council of the regulation to reduce gas demand and prepare for the winter.

It is a decisive step to face down the threat of a full gas disruption.

Thanks to today’s decision, Europe is now ready to address its energy security, as a Union.

— Ursula von der Leyen (@vonderleyen) July 26, 2022

The proposal approved by EU energy ministers is for all countries of the bloc to voluntarily cut gas use by 15 percent from August to March. The cuts could be effectuated binding in a supply emergency, albeit countries agreed to exempt numerous countries and industries after some governments had resisted the EU’s original proposal to impose a binding 15 percent cut on every country.

The agreement would send a message to Russian leader Putin telling him that Europe remained united despite Moscow’s latest gas cuts, according to German Economy Minister Robert Habeck.

“You will not split us,” Mr Habeck said.

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

The reasoning for the latest reduction of gas flows, Russia’s Gazprom pointed the finger at the need to halt the operation of a turbine. This was dubbed by EU energy chief Kadri Simson, a “politically motivated” motivated.

The #EU energy ministers will discuss today our preparedness for coming winter.

Yesterday’s announcements by Gazprom underlines again we must be ready for a disruption of Russian gas at any moment.

We must tackle this risk now & together.


— Kadri Simson (@KadriSimson) July 26, 2022

Prior to its invasion of Ukraine, Russia supplied 40 percent of EU gas. The invader country continues to claim it is a reliable energy supplier, dubbing the invasion a “special military operation”.

Countries such as Ireland and Malta would be exempted from the binding 15 percent gas cut as they are not connected to other EU countries’ gas networks.

Gas prices soared following the news of the latest reduction to Russian supply. This added to the cost of filling storage while creating incentives to use less.

Early on Tuesday, the benchmark front-month Dutch contract TRNLTTFMc1 rose almost 10 percent and is more than 450 percent higher than a year ago, although down from record highs touched shortly after Russia began its invasion of Ukraine.

National conditioning to influence cuts

Gas cut targets could be weaker for some countries, depending on if they meet an EU target for filling gas storage by August. Based on current storage levels cuts would be softened for roughly a dozen states, including Germany and Italy.

Gas used in critical industries, such as energy-intensive steelmaking, could also be exempted 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. Given the fact that Madrid does not rely on Russian, but on Algerian, gas and has said cutting its own demand would not help other countries since it lacks the infrastructure capacity to share spare fuel, Spain could be given a lower gas cut target.

“Everyone understands that when someone asks for help, you have to help. Help can be in different ways, but I believe that the spirit of collaboration will prevail,” Spanish Energy Minister Teresa Ribera said on Tuesday.

🇪🇸 Teresa Ribera strikes conciliatory tone ahead of #TTE:
– Solidarity important vs Putin's energy blackmail
– But solidarity has to be flexible and efficient
– This package doesn't fully satisfy anybody but can be a positive middle ground
– We miss some things but we'll vote yes

— Jorge Liboreiro (@JorgeLiboreiro) July 26, 2022

The EU plan has tested countries’ solidarity, with Greece and Poland among the countries opposed to mandatory gas cuts.

Polish Climate Minister Anna Moskwa said the deal would impose no constraints on Poland’s gas use, and opposed the idea that a country should curb its industrial gas use to help other states facing shortages.

She also said earlier that Greece, Portugal, Spain, Cyprus and Malta were also against the obligatory gas consumption cuts.

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.

So far EU countries have reduced their combined gas use by only 5 percent, despite months of soaring prices and dwindling Russian supplies.

“Fifteen percent will probably not be enough given what the Russians have just announced,” Irish Environment Minister Eamon Ryan said.

The deal requires backing from a majority of countries to trigger the binding gas cuts after many opposed the Commission’s original proposal that it has the final say.

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