Triple impact on gas supplies to Europe led to a sharp rise in prices

Italian energy giant ENI said on Wednesday that Gazprom, Russia’s state-owned gas producer, would cut its supplies by 15%. An ENI spokesperson told CNN Business that the cause is unknown.

The news came on the same day that Gazprom announced it would cut off flows for the second time in two days through its Nord Stream 1 gas pipeline, a major artery linking Russian gas with Germany and the largest producer of liquefied natural gas (LNG). in the USA. said he would not work until September.
On Tuesday, Gazprom announced that it would cut gas supplies via Nord Stream 1. by 40% as Siemens Energy delayed the return of turbines needed to repair the pipeline. Then on Wednesday, Gazprom said it would cut supplies by another third to 67 million cubic meters from Thursday.

Siemens took the turbines to one of their factories in Canada for service. Tuesday’s statement said it was “impossible” to return the equipment to Russia due to sanctions Canada has imposed on the country over its invasion of Ukraine.

ENI has confirmed to CNN Business that it is not receiving gas from the Nord Stream 1 gas pipeline.

European gas futures prices jumped more than 20% on Wednesday afternoon to reach 120 euros ($125) per megawatt hour (MWh), according to the Intercontinental Exchange, although prices have since eased slightly and are trading around 113 euros. ($117) per MWh. MWh

German Economy Minister Robert Habeck called Gazprom’s decision “political” and not “technically justified.”

“How this will affect the gas market in Europe and Germany, we will have to wait and see,” he said at a press conference on Wednesday.

Khabek said in a statement that Gazprom was deliberately knocking over the apple cart.

“Current reports clearly show that the justification given by the Russian side is just a pretext,” he said. “Obviously this is a strategy to upset and drive up prices.”

Europe has been trying to cut Russian natural gas imports since Russia’s invasion of Ukraine in late February. It has set a goal of cutting Russian gas consumption by two-thirds by the end of the year and has rapidly increased imports of LNG as a substitute.

But major manufacturer Freeport LNG said on Tuesday it would close its Texas plant for 90 days after a fire broke out last week and would only be partially operational until the end of this year. Earlier it was reported that the plant will be closed for at least three weeks.

Freeport has produced about a fifth of U.S. LNG exports this year, according to analytics firm Vortexa.

In recent weeks, Gazprom has cut off gas supplies to Poland, Bulgaria and Finland, as well as energy companies in Denmark, Germany and the Netherlands, due to their refusal to comply with its demand for payment in rubles.

But some European firms, including ENI, have tried to find a workaround. The company said last month that it had begun the process of opening two accounts with Gazprombank, one in euros and one in rubles.

Fixed: An earlier version of this article incorrectly estimated Freeport’s share of the LNG market.

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