Russia said it would further reduce natural-gas supplies to Europe this week, lobbing another volley in its economic war with the West and raising new questions about Europe’s ability to avoid shutting down factories and leaving homes cold this winter.
Russian state-owned energy producer Gazprom PJSC said gas exports through the vital Nord Stream pipeline to Germany would drop to about a fifth of the pipe’s capacity, blaming sanctions-related problems with turbines that have already reduced flows. The fresh reduction in the pipeline’s capacity—from 40% currently to 20%—is expected to take effect Wednesday, Gazprom said.
Wholesale European gas prices jumped 12% Monday to 179 euros, or about $183, a megawatt-hour. They have more than doubled so far this year and are expected by analysts to keep rising as winter approaches, adding to inflation that is straining economies, governments and financial markets in the region.
European officials and analysts say Russia President Vladimir Putin is weaponizing gas deliveries, aiming to retaliate for economic sanctions imposed on Russia and weaken the West’s resolve to give military and financial assistance to Ukraine. By keeping some gas flowing, they say, Moscow is keeping Europe guessing and maximizing the leverage it has over Europe’s energy security to sow political fissures.
“Russia is playing a strategic game here,” said Simone Tagliapietra, a senior fellow at Brussels-based economic think tank Bruegel. “Fluctuating already low flows is better than a full cutoff as it manipulates the market and optimizes geopolitical impact.”
European government officials and companies say Moscow is using the turbine holdups as a diversion in what Berlin has called an economic attack. Nord Stream has an elaborate contingency system with at least one spare turbine available at all times, The Wall Street Journal previously reported. The German Economy Ministry on Monday said there was no technical reason for the reduction in deliveries.
The planned reduction complicates Europe’s efforts to fill up its gas storage ahead of winter. Without enough gas in the higher-demand months, governments say they are likely to ration energy and the continent’s fragile economy could sink into recession. Germany’s federal energy regulator has said that the country would struggle to reach its storage goals with Nord Stream flows capped at 40%. Reaching them at 20% is an even taller order.
Berlin has drawn up plans to dole out gas to consumers, hospitals and other critical sectors while potentially leaving industry short of supplies. For many companies in sectors reliant on gas, such as the chemical industry, rationing would mean halting production altogether, risking job cuts and upending supply chains around the globe.
No comments:
Post a Comment