Russia’s Supply Of Gas To Europe Drops To Just 20%, Disrupting Storage Plans For Winter

Topline

The supply of natural gas from Russia to Europe through the Nord Stream 1 pipeline dropped even further on Wednesday, potentially disrupting the European Union’s plans to raise its gas storage levels ahead of winter just a day after the bloc agreed to a deal to reduce usage over the next few months.

Key Facts

According to Reuters, the Nord Stream 1 pipeline—which carries gas from Russia to Germany through the Baltic Sea—was operating at around 20% of its total capacity, which is sharply down from the 40% it was operating at last month.

Kremlin spokesperson Dmitry Peskov said Russian state-run gas giant Gazprom is sending “as much as needed and possible” but is facing issues with some of its equipment whose repairs have been disrupted by European sanctions.

The drop in supply could severely jeopardize plans by the European Union to have at least 80% of its gas storage capacity filled by the start of November, to ensure uninterrupted supply during the winter.

Europe will need gas supply from Russia to be around 20-25% of Nord Stream 1’s capacity to ensure that it meets its storage target, the Reuters report adds, citing Royal Bank of Canada analysts.

The European benchmark index for gas, the Dutch TTF Gas Futures, was up 3% on Wednesday at €206 ($209) per megawatt hour—more than double of what it was at the start of June.

Big Number

67.11%. That is the percentage of Europe’s total gas storage capacity that is currently full, according to an official tracker.

Key Background

On Tuesday, member nations of the European Union agreed to cut their usage of gas by as much as 15% until March 2023, to deal with the current crisis and reduce its dependency on Russia. The “voluntary reduction” will go into effect in August and will focus on reducing the use of gas to generate electricity. The bloc, however, had to carve out exceptions for some member states who heavily rely on gas to generate electricity and are not connected to the EU’s grid. European officials have repeatedly painted Russia’s slashing of supplies as a form of “blackmail” and an “economic attack.” Germany in particular, has warned that a supply crunch during the winter could lead to a Lehman Brothers-style collapse of Europe’s energy sector.

Further Reading

Russia cuts gas flows further as Europe makes savings plea (Reuters)

EU Finally Strikes Deal To Slash Gas Demand As Russia Starts Squeezing Taps Closed (Forbes)