# Analysis – Russian gas flow too low to fill Europe’s storage
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-25
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Russia Gas Cuts Put Europe at Risk of Rationing
Meta Description: Russia's reduced gas flows leave Germany struggling to refill storage, risking rationing during winter. Stay informed on the energy crisis.
URL: https://financedigest.com/analysis-russian-gas-flow-too-low-to-fill-europes-storagehtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-07-25t190010z2lynxmpei6o0v0rtroptp4ukraine-crisis-europe-gas-analysis-pix-1736815540914-compressed.jpg)

By Nina Chestney

LONDON (Reuters) – Russia’s cut in supplies through its main gas pipeline to Germany will leave countries unable to meet goals to refill storage and Europe’s biggest economy faced with rationing industry to keep its citizens warm during the winter months.

Politicians in Europe have repeatedly said Russia could cut off gas flows this winter, which would thrust Germany into recession and lead to soaring prices for consumers already grappling with inflation at multi-year highs.

So far, the most high-profile casualty of [Russia’s reduced gas flows is Germany’s biggest gas importer](https://www.financedigest.com/biden-bans-russia-oil-imports-to-u-s-warns-u-s-gasoline-prices-will-rise-further.html "Biden bans Russia oil imports to U.S., warns U.S. gasoline prices will rise further") Uniper. The government was last week forced to bail it out.

On Monday, the squeeze on Germany tightened when Gazprom said it needed to halt the operation of a turbine, meaning flows through [Nord Stream](https://www.financedigest.com/denmark-invites-nord-stream-operator-to-help-salvage-unidentified-object.html "Denmark invites Nord Stream operator to help salvage unidentified object") 1 from Russia to Germany will drop to just 20% of capacity from Wednesday.

Gazprom had previously cited the delayed return of another turbine being serviced in Canada as the reason to reduce flows to [40% in June before halting them altogether for 10 days](https://www.financedigest.com/uk-retailers-see-40-jump-in-boxing-day-shoppers-springboard.html "UK retailers see 40% jump in Boxing Day shoppers -Springboard") of scheduled maintenance this month.

Following the planned repair period, Gazprom resumed pumping on schedule on July 21, but at the reduced level of 40%.

Even before the latest reduction was announced on Monday, Germany’s [energy network regulator had said the country would struggle](https://www.financedigest.com/french-energy-suppliers-will-let-struggling-bakers-renegotiate-contracts-le-maire.html "French energy suppliers will let struggling bakers renegotiate contracts – Le Maire") to meet its storage target.

The European Union as a whole plans to refill storage to [80% of capacity](https://www.financedigest.com/varo-energy-buys-80-of-dutch-biogas-firm-aims-to-double-capacity-by-2026.html "Varo Energy buys 80% of Dutch biogas firm; aims to double capacity by 2026") by Nov. 1 to provide a buffer for the peak [demand winter months](https://www.financedigest.com/oil-prices-ease-to-trade-near-2-month-lows-on-china-demand-fears-dollar-strength.html "Oil prices ease to trade near 2-month lows on China demand fears, dollar strength"). So far, European gas storage levels are at 66% full, data from Gas Infrastructure Europe shows.

Germany has an even higher [goal of reaching](https://www.financedigest.com/renault-to-reach-its-goal-on-integrated-electric-vehicles-chain-before-2030-ceo.html "Renault to reach its goal on integrated electric vehicles chain before 2030 -CEO") 95% full by November.

At 20% of capacity, [Europe will be able to refill storage to only 75%-80% ahead of winter](https://www.financedigest.com/analysis-europes-banks-dim-lights-as-they-brace-for-winter-blackout.html "Analysis-Europe’s banks dim lights as they brace for winter blackout"), Wood Mackenzie consultancy said on Monday.

As a result, Europe is likely to get through the heating season with only 20% gas in store at the [end of March](https://www.financedigest.com/tennis-panic-attack-ends-tsurenkos-indian-wells-as-raducanu-marches-on.html "Tennis-Panic attack ends Tsurenko’s Indian wells, as Raducanu marches on") – a very low level,” Kateryna Filippenko, Principal Analyst, Global Gas Supply, at wood mackenzie said.

An extra cold winter would strain the situation further, especially if the weather is severe in Asia, as well as Europe, which would limit global availability of liquefied natural gas (LNG) to supplement [pipeline supplies](https://www.financedigest.com/keystone-oil-pipeline-restart-timetable-unclear-traders-worry-about-supply.html "Keystone oil pipeline restart timetable unclear; traders worry about supply").

[TIGHTENING SQUEEZE](https://www.financedigest.com/russias-gazprom-tightens-squeeze-on-gas-flow-to-europe.html "Russia’s Gazprom tightens squeeze on gas flow to Europe")

Gas flows via other pipeline routes, such as Ukraine, have also fallen since Russia invaded its neighbour in February, in what Moscow calls a “special military operation”, and the risk of a total cut-off through [Nord Stream](https://www.financedigest.com/new-intelligence-points-to-pro-ukraine-group-in-nord-stream-attack-nyt.html "New intelligence points to pro-Ukraine group in Nord Stream attack -NYT") 1 looms large.

While Germany is particularly dependent on Russian gas, Austria and central and eastern [Europe are also big users of Russian](https://www.financedigest.com/exclusive-europe-ready-for-baltics-emergency-switch-off-from-russian-grid.html "Exclusive: Europe ready for Baltics emergency switch-off from Russian grid") supplies.

Before the cuts linked to the turbine servicing in Canada, [Russia has cut](https://www.financedigest.com/pimco-cut-big-position-in-russia-cds-by-adding-bonds-in-q2.html "PIMCO cut big position in Russia CDS by adding bonds in Q2") gas flows to Bulgaria, Denmark, Finland, Dutch firm Gasterra and Shell for its German contracts, after they all rejected a Kremlin demand issued in March to switch to payments in roubles.

Analysts and politicians [say it would be very easy for Russia to find further reasons for further cuts](https://www.financedigest.com/amazon-ceo-says-job-cuts-to-exceed-18000-roles.html "Amazon CEO says job cuts to exceed 18,000 roles").

The key question is whether Russia wants to maximise pressure now and derail [Europe’s plans](https://www.financedigest.com/explainer-europes-fiercely-contested-plan-to-cap-gas-prices.html "Explainer-Europe’s fiercely contested plan to cap gas prices") to refill its gas inventories by the fall, or if Moscow wants to keep its powder dry until later in the year,” said Centre for Strategic and International Studies fellows Ben Cahill and Isabelle Huber.

The European Union has been preparing for the prospect of continued lower supplies or a complete stoppage by seeking out alternative suppliers, encouraging [energy saving](https://www.financedigest.com/france-to-turn-off-hot-water-in-public-offices-to-save-energy.html "France to turn off hot water in public offices to save energy") and increasing coal generation.

Last week, the [European Commission](https://www.financedigest.com/german-economy-expected-to-grow-modestly-in-2023-european-commission.html "German economy expected to grow modestly in 2023 – European Commission"), the EU executive, proposed a target for all member states to cut gas use by 15% from Aug. 1 to allow [storage to fill](https://www.financedigest.com/eu-will-consider-making-countries-fill-gas-storage-energy-chief.html "EU will consider making countries fill gas storage – energy chief") more quickly.

But the plan faces resistance from member states, with some flatly against binding [cuts and others unwilling to let Brussels control their energy](https://www.financedigest.com/france-strains-to-avert-power-cuts-as-cold-snap-tests-europes-energy-resolve.html "France strains to avert power cuts as cold snap tests Europe’s energy resolve") use.

The entire European energy system is going through a crisis, and even with the restart of Nord Stream 1, the region is in a tight position with continued [risk to energy](https://www.financedigest.com/britains-tax-take-risks-blowing-green-energy-off-target.html "Britain’s tax take risks blowing green energy off target") security,” Karolina Siemieniuk, analyst at consultancy Rystad Energy, said.

European [countries will need](https://www.financedigest.com/5-countries-you-need-to-have-an-offshore-account-in.html "5 Countries You Need To Have An Offshore Account In") to work together fast if they are to survive the winter relatively unscathed and even if they do, the spectre of the next winter in 2023/24 is likely to keep prices elevated for months on end.

(Reporting by Nina Chestney; additional reporting by Marwa Rashad; editing by Simon Webb and Barbara Lewis)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---