Russia’s natural gas shipments to European countries once again failed to meet the demand. Europe’s less demand for gas from Russia coincided with an extreme heat wave in the south of the continent. Concerns that Europe would have difficulty in stocking natural gas for the winter months also caused energy prices to rise.
Italy and Slovakia reported receiving less than half of the usual volume from the Nord Stream 1 pipeline, which runs from Russia to Germany under the Baltic Sea. The Nord Stream 1 pipeline accounts for 40 percent of Russia’s energy shipments to the European Union (EU).
France, on the other hand, reported that since June 15, Russian gas has not reached it through Germany. German energy firm Uniper reported that it received 60 percent less than the agreed amount of gas from Russia, but compensated the rest from other sources.
Germany’s energy market regulator said the situation is “tense” but that gas supplies are currently stable.
The EU’s dependence on Russian gas and the risk of cutting gas supplies to Europe in retaliation for economic sanctions imposed after Moscow’s invasion of Ukraine poses a major challenge for the EU. EU countries are starting to increase their energy inventories and seek different supply options.
The need for air conditioning also increases the demand
The unusually extreme heat wave, which is effective in Spain and France at the beginning of the summer season, also raises concerns. In order to meet the demand for electrical energy in order to meet the increasing need for air conditioning, it is necessary to buy more natural gas.
The Dutch wholesale futures natural gas sales price, which is the benchmark price for Europe, increased by 6 percent for July. Prices of energy supply contracts also rose across Europe.
Italian energy company Eni noted that today it can only receive half of the 63 million cubic meters it demands daily from Russian Gazprom, and that the amount of gas supplied in the previous two days is missing.
Visiting Ukraine yesterday with French President Emmanuel Macron and German Chancellor Olaf Scholz, Italian Prime Minister Mario Draghi accused Moscow of using natural gas as leverage for political reasons.
Russia, on the other hand, announced that the Nord Stream 1 pipeline will deliver less gas to Europe, with the German Siemens Energy late returning the equipment sent to Canada for maintenance. Russian Deputy Prime Minister Alexander Novak said that Siemens Energy and Canada should wait to see how they respond to the delay.
Canada had previously reported that it was in contact with Germany to resolve the issue.
Countries aim to keep their gas stocks full for the winter months
Italy, which supplied 40 percent of its natural gas imports from Russia last year, aims to keep its natural gas stocks at least 90 percent full for the winter season. This rate is 54 percent higher than current stocks.
If Russia continues to limit supply, Italy can be expected to declare a natural gas emergency next week. This may lead to a reduction in natural gas consumption in Italy, a limited supply of natural gas to industrial facilities, and an increase in energy production from coal in thermal power plants.
The increase in imports of liquefied natural gas across Europe has increased the level of inventories this year. EU-wide gas inventory currently stands at 52 percent of capacity. According to ING Research firm experts, this rate is slightly below the five-year average and above the 43 percent stock rate a year ago.
“The extended cut in supply raises concerns about whether the EU will have sufficient stocks as we enter the upcoming warming season,” experts warned, noting that stock levels decreased for the first time since April this week.
The Danish energy agency reported that while tanks continue to fill, this is slower due to reduced natural gas deliveries.
Power plants in Spain, where temperatures rise, bought the largest amount of natural gas for electricity generation since records began Wednesday.
Gazprom may increase the flow of gas through Ukraine to make up for the shortage in the Nord Stream line. However, no signal has yet been received that this is happening. In addition, flow in the Yamal-Europe pipeline has shifted eastward, rather than westward, toward Germany over the past few months.
It is expected that the Nord Stream 1 line will enter into annual maintenance between 11-21 July and gas flow will stop completely during this period.
America is a critical country that has been supplying liquefied natural gas (LNG) to Europe for months. But an explosion at an LNG export terminal in the state of Texas last week left the terminal out of service until September. It is estimated that from September until the end of 2022 the terminal will only partially operate.
Meeting 20 percent of America’s LNG exports, the facility is one of the most important suppliers to European energy customers.