Cuts in natural gas supplies from Russia are forcing European utilities to tap reserves normally used during the peak winter season, Bloomberg reported on June 17.
In one of the latest signs of how the region’s energy crisis is escalating, storage levels reportedly fell last week for the first time since mid-April, when traders typically start to top up facilities. That’s helping drive gas futures toward their biggest weekly gain since the Kremlin launched the so-called “special military operation” in Ukraine on February 2, according to Bloomberg.
Russia has slashed supplies to customers in Italy, Germany, France and Austria, adding to smaller reductions to other nations in the past few weeks. Moscow said it had to curb capacity on its Nord Stream link under the Baltic Sea because of technical issues, but Germany called the reductions “politically motivated” aimed at pushing up prices.
The cuts by Russia are reportedly coinciding with an outage at a major liquefied natural gas plant in the United States, another crucial source of European supplies. It means that less fuel will arrive from across the Atlantic for months.
Europe’s storage sites were about 52% full as of June 14, with the latest data from the gas infrastructure operators of Europe (GIE) showing a one percentage point decline, Bloomberg said, noting that they still remain near the five-year average level.
Russian exporter Gazprom PJSC said on June 16 that it doesn’t see a solution “as of now” to the Nord Stream issues.
According to Bloomberg, Gazprom could use spare capacity on pipelines crossing Ukraine to supply European customers, but hasn’t opted for that yet. The link is reportedly also scheduled for an annual maintenance shutdown next month.
Bloomberg, citing Wood Mackenzie Ltd, noted that in the worst-case scenario, where the Nord Stream pipeline is shut totally, the region will fail to reach the stockpile levels the European Union has ordered by the start of the heating season in November. That means the region could run out of stocks completely by January.
