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Picture: 123RF/IONUTANSICA
Picture: 123RF/IONUTANSICA

London  — Russian gas supply to Europe fell further on Thursday, sparking concerns about refilling storage for winter and igniting a diplomatic tussle as Russian supplier Gazprom blamed Western sanctions for hampering maintenance work.

The drop in supply comes as the leaders of Germany, Italy and France visit Ukraine under pressure to provide Kyiv more weapons for its war with Russia and back its bid to join the European Union.

On Thursday, Gazprom announced a second cut to supply in as many days along the Nord Stream 1 pipeline to Germany, slashing flows to just 40% of capacity.

Germany’s economy minister said the move was aimed at sowing uncertainty and pushing up energy prices.

Dutch wholesale gas prices, the European benchmark, jumped by up to 25% on Thursday morning.

Gazprom blamed the cuts on delayed delivery of Siemens Energy equipment undergoing maintenance in Canada. Germany's energy regulator rejected that explanation.

Replacing missing volume

Uniper, Germany’s biggest importer of Russian gas, said deliveries from Russia were down a quarter from agreed volumes, but said it was able to procure the missing volumes from other sources.

Gas flows to Italy were also down and Czech power utility CEZ said it had observed a similar cut to its Russian gas supply but was replacing the missing volumes from other sources.

Austrian energy firm OMV also said Gazprom had informed it of a reduction in gas deliveries.

The cuts come as Nord Stream 1 is set to undergo annual maintenance on July 11-21 when supply will be cut off completely.

They also come as the continent looks to fill storage for winter while pledging to reduce its reliance on Russian gas in the future.

Gazprom cutting supply to Germany is a warning signal that could cause problems for Europe’s biggest economy this winter, the head of the country’s energy regulator told a newspaper on Thursday.

"It would significantly worsen our situation," Klaus Mueller told the Rheinische Post daily.

"We could perhaps get through the summer as the heating season is over. But it is imperative that we fill the storage facilities to get through the winter."

UK deal

Meanwhile, Britain’s Centrica has signed an agreement with Norway’s Equinor for additional gas supplies to the UK during the next three winters.

Britain does not depend on Russian gas imports, making it less vulnerable to the current supply shock, and can export gas to Europe via pipelines.

In addition to concerns over Nord Stream flows, liquefied natural gas (LNG) supply is set to tighten in the coming months.

Damage from a fire last week at a US LNG export plant in Texas, operated by Freeport LNG, will keep it fully offline until September with only partial operation through the year-end.

The facility accounts for about 20% of US LNG exports and has been a major supplier to European buyers seeking alternatives to Russian gas.

"There is risk of further delay, in our view, as plant restart is subject to regulatory approval and there are two ongoing investigations on the cause of the LNG leak and resulting excess emissions of various pollutants, which may require stringent safety assessments," analysts at investment bank Jefferies said.

Reuters 

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