The European agreement to save gas
On Tuesday 26 July, the countries of the European Union reached a political agreement to reduce their gas consumption in a coordinated way by 15 percent between 1 August 2022 and 31 March 2023. The reduction is calculated on the basis of the average consumption of gas in the last five years over the same period.The objective of the Union is to accumulate stocks to be ready in the event of complete and definitive interruptions of gas supplies by Russia. Over the past few weeks, Moscow has in fact implemented several cuts in supplies and has repeatedly given the impression of wanting to use its gas as a weapon of blackmail towards countries that still depend heavily on it for their energy supply. The latest of these cuts, which started today, has reduced the flows of the Nord Stream, the pipeline that carries Russian natural gas across the Baltic Sea to Western Europe, to 20 percent of its total capacity.
Era There has been talk of such an agreement at European level for some time, and the Commission had presented a coordinated gas saving plan last week, more rigid than the current one, which had generated criticism from several member states. In fact, countries such as Greece, Spain, Cyprus and Portugal asked that the different starting situations be taken into account, given that not all countries depend on Russian gas in equal measure. The turning point came after several potential exemptions and waivers were added that take into account the level of storage achieved and the possibility of exporting the gas saved to others, which made the agreement more flexible. The only country that opposed it was Hungary, but given that a qualified majority was sufficient to approve the measure, the vote against did not affect the final result.
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According to the Minister of Ecological Transition Roberto Cingolani, in the final version of the agreement, Italy will have to save 7% compared to the average of annual gases for the last five years, but the savings plan is already foreseen by the government is equal to or greater than this figure. Consequently, it will not be necessary to implement additional measures to comply with the agreement.
Europe agrees compromise gas curbs as Russia squeezes supply
BRUSSELS, July 26 (Reuters) - European Union countries bracing for further cuts in Russian gas supply on Tuesday approved a weakened emergency plan to curb demand, after striking compromise deals to limit reductions for some countries.
Europe faces a tighter gas squeeze from Wednesday, when Russia's Gazprom (GAZP.MM) has said it would cut flows through the Nord Stream 1 pipeline to Germany to a fifth of capacity. read more
With a dozen EU countries already facing lower Russian supplies, Brussels is urging member states to save gas and store it for winter, fearing Russia will completely cut off flows in retaliation for sanctions over the Ukraine war.
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Energy ministers approved a proposal for all EU countries to voluntarily cut gas use by 15% in the August-March period from the average from 2017-2021. read more
The cuts could be made binding in a supply emergency, provided a majority of EU countries agree. But members agreed to exempt numerous industries from the binding 15% cut. read more
German Economy Minister Robert Habeck said the agreement would show Russian President Vladimir Putin that Europe remained united. 'You will not split us,' Habeck said.
Hungary was the only country that opposed the deal, two EU officials said.
Ukrainian President Volodymyr Zelenskiy said Russia was cutting supplies to impose 'price terror' against Europe.
'Using Gazprom, Moscow is doing all it can to make this coming winter as harsh as possible for the European countries. Terror must be answered - impose sanctions,' he said in a video address on Tuesday. read more
Gazprom has blamed its latest reduction on needing to halt operation of a turbine. EU energy chief Kadri Simson dismissed that reason, calling the move 'politically motivated'. read more
Simson said the agreement should ensure countries save enough gas to survive an average winter if Russia fully cut supplies now, but an unusually cold winter would require more severe measures.
Russia supplied 40% of EU gas before it invaded Ukraine on Feb. 24.
Pipes at the landfall facilities of the 'Nord Stream 1' gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke//File Photo
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The EU deal would exempt from the binding 15% gas cut Ireland, Malta and Cyprus. These countries are not connected to other member states' gas networks and therefore could not share spare gas if needed.
Countries with a limited ability to export gas to other EU countries can request a lower target, provided they export what they can. That could include Spain, which does not rely on Russian gas and had initially opposed the plan.
'Everyone understands that when someone asks for help, you have to help,' Spanish Energy Minister Teresa Ribera said.
Countries that overachieve an EU target for filling gas storage by August could also face weaker targets, potentially softening cuts for roughly a dozen states with relatively full storage, including Germany and Italy.
States can exempt gas used in critical industries, such as energy-intensive steelmaking.
Italian Ecological Transition Minister Roberto Cingolani said the country's binding target would be nearer 7% than 15%, once gas reductions it has made compared with previous years were taken into account.
News of the latest supply drop has driven gas prices higher, adding to the cost of filling storage, while creating incentives to use less.
On Tuesday, the benchmark front-month Dutch contract rose more than 10% and is around 430% higher than a year ago.
The plan has tested countries' solidarity. Poland approved the deal, but Climate Minister Anna Moskwa said one country's industry should not be forced to use less gas to help other states. read more
Others were more positive, including Malta and Portugal, which won softer targets. Maltese energy minister Miriam Dalli said the deal reflected countries' varying energy situations.
'We managed to pass on a strong message of solidarity,' she said.
Some raised concern the savings would still not be enough to avert a winter shortage. Levels vary between countries, but the EU has reduced its combined gas use by only 5%, despite months of soaring prices and Russian supplies.
'Fifteen percent will probably not be enough, given what the Russians have just announced,' Irish Environment Minister Eamon Ryan said.
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Reporting by Kate Abnett, Philip Blenkinsop, Robin Emmott, Marine Strauss, Gabriela Baczynska, Giselda Vagnoni and David Ljunggren; Editing by Philip Blenkinsop, Matthew Lewis, Barbara Lewis and Jan Harvey
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