© Reuters. FILE PHOTO – Pipes at the landfall facilities of the ‘Nord Stream 1’ gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke
By Nina Chestney
LONDON (Reuters) – A further decline in Russian gas flows to Europe via the Nord Stream 1 pipeline, coinciding with an early heat wave gripping its south, deepened concerns the continent may struggle to build up storage ahead of the winter season as planned.
Italy and Slovakia reported receiving less than half of the usual volumes through the pipeline on Friday, which crosses the Baltic Sea from Russia to Germany and accounts for around 40% of Russian pipeline flows to the European Union.
France reported it was receiving no Russian gas from Germany since June 15. Germany’s power industry association BDEW said lower volumes could be replaced by other sources, such as Norway and the Netherlands.
EU’s reliance on Russian gas and a risk that Moscow could cut it off in retaliation to economic sanctions imposed after its invasion of Ukraine has been a major headache for the bloc, prompting it to build up inventories and seek alternative supplies.
Italy’s Eni said it would receive only half of the 63 million cubic metres (mcm) per day it had requested from Russia’s Gazprom (MCX:GAZP) on Friday, after experiencing a shortfall the two previous days. Earlier, Russia’s Gazprom said it hadd reduced gas supply to Germany via the pipeline by almost 60%.
Italian Prime Minister Mario Draghi, who visited Ukraine together with his French and German counterparts on Thursday, accused Moscow of using its gas supplies for political reasons, Kremlin said the supply cuts were not premeditated and were caused by problems with the delayed return of equipment sent for maintenance to Canada due to sanctions.
Italy, which last year sourced 40% of its gas imports from Russia, aims to have the country’s gas storage at least 90% full for the winter season, up from 54% now.
Across Europe, storage levels have recovered this year due to strong liquefied natural gas imports. Inventories for the EU as a whole are currently 52% full, just below the five-year average and above the 43% seen at this time last year, said analysts at ING Research.
“However, a prolonged outage will raise concerns over the ability of the EU to build enough storage going into the next heating season,” they said. They said in a “worrying” sign, storage levels fell this week for the first time since April.
In Denmark, the country’s energy agency said that while it could continue to fill stocks, it was happening at a slower pace due to reduced gas deliveries.
HEAT WAVE DEMAND
An unseasonably early heat wave across parts of Spain and France added to the concerns, prompting more gas buying as demand for electricity needed to power air conditioning spiked.
In Spain, power plants bought more gas to generate electricity on Wednesday than any other day since records began, transmission system operator Enagas said.
Gazprom could increase flows via Ukraine to make up for the Nord Stream shortfall but there has been no sign of it doing it yet. Added to that, flows via the Yamal-Europe pipeline have been flowing eastwards for several months rather than the usual westerly direction to Germany.
Nord Stream 1 is also scheduled to undergo annual maintenance from July 11-21 which will halt all flows.
The United States has been a crucial LNG exporter to Europe for months. But a blast last week at a major LNG export terminal in Texas will keep it idle until September and it will operate only partially from then until the end of 2022.
The facility, which accounts for about 20% of U.S. LNG exports, has been a major supplier to European buyers.
Source: Investing.com
