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German Vice-Chancellor Robert Habeck accused Russia of tampering with natural gas markets after its leading energy company reduced deliveries to its largest two European customers.
European natural gas futures shot up to their highest levels since April on Wednesday after Gazprom said volumes through the Germany-bound Nord Stream pipeline would be cut by 60%, rather than by 40% as previously announced. It also is restricting supplies to Italy by 15%, according to Italian gas company Eni.
DAILY ON ENERGY: THE LIMITS OF RUSSIA’S ENERGY PIVOT
Gazprom has yet to offer an explanation for the disruption to Italy, while it said flows to Germany will fall due to problems at a gas compression station.
The company said on Tuesday that German industrial manufacturer Siemens failed to return under-repair gas compressor units on time and said the compressor station’s condition allowed for the provision of 100 million cubic meters of gas per day, versus the 167 mcm per day planned.
Siemens said one of the compressor turbines under repair was stuck in Canada due to sanctions, Bloomberg reported, which Habeck also disputed.
“We have established, in close consultation with the European Commission, that the maintenance problems are not related to the sanctions,” he said.
Gazprom announced further on Wednesday that it took another compression engine offline and adjusted the delivery volume down to 67 million cubic meters per day.
Habeck said he didn’t buy the explanations and called Gazprom’s actions “obviously a strategy to unsettle and drive up prices,” according to German news outlet Deutsche Welle.
The reductions put more strain on the relationship between Russia and its European gas customers, which rebuked Russia for invading Ukraine but continue to import its oil and gas.
They also make things more difficult for a Europe that’s already working overtime to shore up gas supplies for the winter, an effort that’s been further blunted by the explosion at the Freeport LNG terminal in Texas on June 8, which has been supplying an increasing share of Europe’s LNG imports.
European leaders have broadly accepted the imperative to displace Russian oil and gas with renewable sources and fossil fuel imports from friendlier nations, and the bloc agreed to terms of an embargo on most Russian oil imports last month.
Russia has already initiated gas cutoffs to five EU members — Poland, Bulgaria, Finland, Denmark, and the Netherlands — where companies refused to comply with Vladimir Putin’s demand for new rubles payment terms.
Other energy companies, including those operating in Germany and Italy, have complied and opened special accounts in accordance with Putin’s demand in order to keep supplies flowing.
Germany and Italy are the top European buyers of Russian gas and have spent 12.1 billion and 7.8 billion euros, respectively, on Russian energy imports over the first 100 days of the war in Ukraine, according to research from the Europe-based Center for Research on Energy and Clean Air.
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Their influence has been critical in setting the tone as to what kind of sanctions terms governments would be willing to accept. So far, sanctioning natural gas imports has been off the table, and some leaders have stressed that the European Union is a long way from consensus on the subject.
