Russia typically supplies about 40 percent of its gas supply to Europe, but the possibility of a supply disruption following the invasion of Ukraine has increased in recent weeks, with G7 countries rejecting Moscow’s request that payments be made in rubles.
According to the quoted source, the European Commission says that stored gas usually accounts for about a quarter of the amount used in Europe in the winter months, where it is an important fuel for heating.
In an attempt to bolster supply for next winter, the Commission has proposed legislation requiring gas storage operators to fill depots to at least 80% capacity by 1 November. But with tanks now only a quarter full and below the five-year average for this time of year, just under 34%, the task seems incredibly difficult to accomplish without Russian deliveries.
“The 80% target by November 1 is achievable as long as Russian gas continues to flow at least in part,” said Jack Sharples, a researcher at the Oxford Institute of Energy Studies.
“But I think that without Russian gas it is simply not feasible,” Sharples added.
Germany, the largest gas consumer in Europe, which relies on Russia for about half of what is needed, has set a 90% target by November.
Germany’s gas stocks are currently 26% full. But in an unprecedented move, the country on Wednesday also launched an emergency plan that could secure government power if Russia’s gas supply were cut off or shut down.
The European Commission has said that immediate supply emergencies will take precedence over replenishment, with targets not applicable if it declares a European or regional gas supply emergency – which can be done if at least two countries have already issued their own declarations.
“If the Russian deliveries stop tomorrow and then do not restart until next winter or for the whole year or more, then the stocks will not be able to fill up to the level of 80%. EU stocks are likely to reach just over half, perhaps around 54%, “said Kateryna Filippenko, chief analyst at Global Gas Supply in Wood. Mackenzie.
This, Filippenko said, could pose a problem for the industry, as Europe would try to protect vulnerable consumers by reducing industrial gas consumption, potentially by up to a fifth.
The gas storage plan is further complicated by the control of the Russian state gas company Gazprom over several storage centers in northwestern Europe, where stocks are at their lowest level in 5 years.
In Germany, a third of the gas storage capacity belongs to Gazprom.
“We believe that Gazprom is unlikely to try to fill these centers completely, given the declining contract demand for deliveries in Russia and Gazprom’s low appetite to sell in the spot market,” said Leon Izbicki, associate. European Natural Gas and Energy Aspects.
In the event of a gas shortage, German law allows Trading Hub Europe (THE), a gas market hub overseen by the country’s energy regulator, to use empty storage facilities or below the required filling levels to store own purchases.
“Market managers like THE will probably occupy this space on a ‘use it or lose it’ basis … and fill that capacity,” Izbicki said.
The European Commission has also proposed that by 2023 all gas storage centers be 90% full by 1 November. The EU aims to reduce its dependence on Russian gas by two-thirds this year and end all fossil fuel imports from Russia by 2027.
The German government has said that Russian President Vladimir Putin assured German Chancellor Olaf Scholz on Wednesday that the European Union (EU) can continue to pay for Russian natural gas in euros and not in rubles, as recently ordered by the Kremlin leader, reports AFP.
Putin has assured Scholz that next month’s EU payments “will continue to be in euros and will be transferred as usual to Gazprom Bank, which is not subject to sanctions” imposed on Russia by the West because of the war in Ukraine. German Government spokesman Steffen Hebestreit.
Gazprom Bank is the one that will convert the payment from the euro into rubles, states Hebestreit.
Read also: The European Commission proposes the obligation to store natural gas at a minimum level of 80% for next winter
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