Russian President Vladimir Putin attends a cabinet meeting in Moscow on July 25, 2022. Photo / Kremlin Pool Photo via AP)
On the eve of a European Union emergency meeting on cutting natural gas consumption, Russia's state-owned gas monopoly said it would slash gas deliveries to Germany, as Russian President Vladimir Putin once again showed his unpredictability and his power to inflict pain on the bloc for backing Ukraine.
EU energy ministers are set to meet on Tuesday (Wednesday NZT) to weigh a 15 per cent reduction in gas use, specifically because of fears that the Kremlin could create artificial shortages threatening heat and power generation over the winter. As if to confirm such worries, Gazprom, the Russian company, on Monday said it would cut by half the flow through its North Sea pipeline to Germany to just 20 per cent of capacity — less than a week after resuming limited flows following a maintenance shutdown.
Western officials dismissed the Russian explanation of equipment troubles — coincidentally or not, with German equipment — as nothing but a cover for its manipulation. "Based on our information, there is no technical reason for a reduction in deliveries," the German Economy Ministry said in a statement.
Ursula von der Leyen, president of the European Commission, the EU executive branch, said last week, "Putin is trying to push us around this winter," as she proposed that member countries cut gas use by 15 per cent through next spring. The reduction is aimed at building up depleted stores and better positioning themselves for a possible Russian squeeze.
"This is exactly the sort of scenario that President von der Leyen was referring to last week," her spokesperson said on Monday. "This development validates our analysis."
But as Western countries attempt to curb the flow of fossil fuel revenue that supports Russia's government, its war machine and much of its economy, their moves have required a daunting combination of agreement among each other, placating public opinion in their democracies and steering global markets. News of Gazprom's latest supply cut drove the price of European gas futures up 12 per cent on Monday; the price, previously below €30 (about NZ$49) per megawatt-hour, has soared in the past year, at times topping €180.
The autocratic Putin has shown since Russia invaded Ukraine in February that he has plenty of leverage on his side, particularly in tightening or loosening the energy spigot, and he can use it at his sole discretion. He has also demonstrated his knack for keeping adversaries guessing and off-balance, with his government often sending contradictory signals.
On Friday, Russia signed a deal to allow grain shipments from the blockaded port of Odesa to alleviate a global food shortage — and a day later hit the port with missiles, putting the agreement in jeopardy. Even so, Ukraine said on Monday that it was moving ahead with the plan and a United Nations spokesperson said the first ship could set sail in days.
Western countries are shutting down most imports of Russian oil. But that has contributed to shortages that have driven up prices, buoying Russia's revenues and angering Western consumers, while Moscow makes deals to sell to China and India instead. The Biden administration is trying to orchestrate an international deal to limit the prices Russia can charge on world oil markets, but it is a financially and diplomatically complex endeavour.
It took weeks of wrangling for the European Union to agree to cut off most Russian oil, and making the deal required delaying some parts for several months and making exemptions for some small countries.
New divisions have emerged on the EU proposal to cut gas use, as countries such as Greece and Spain that do not rely heavily on Russian gas have chafed at the idea of asking businesses and people to conserve to help Germany, their wealthier northern partner. And European officials are racing to come up with alternative supplies from the Middle East, the United States and elsewhere.
The latest supply cut should make it clear to the 27 EU member countries how vulnerable they are, and how crucial it is that they move quickly and decisively to conserve gas, said Simone Tagliapietra, a senior fellow at Bruegel, a research institute based in Brussels.
"Gazprom's announcement should not surprise," Tagliapietra said. "Russia is playing a strategic game here. Fluctuating already low flows is better than a full cutoff as it manipulates the market and optimises geopolitical impact."
Russia ordinarily supplies 40 per cent of the gas used in the European Union, but the flow fell to less than one-third its average in June. Gas storage facilities in Europe, normally almost full at this point in the year in preparation for winter, are low, leaving the entire continent vulnerable to shortages that would upend industry and private lives alike.
Germany, with Europe's largest economy, has been especially reliant on Russia for gas, getting 55 per cent of its supply from there before the invasion, though that has declined sharply. The primary channel for that supply is the 760-mile (1223-kilometre) Nord Stream 1 pipeline under the North Sea.
In recent years, the pipeline has been shut down for maintenance for about 10 days each July, but in 2020 and 2021 it ran at or near capacity both before and after that closure. This year, Russia started cutting gas shipments already in mid-June, so that stores were low by the time of the shutdown. Gazprom blamed the reduction on a missing turbine that had been shipped to Canada for repair by the German company Siemens.
The turbine was returned to Germany last week and is now making its way to Russia. When the maintenance period ended, Gazprom resumed flow, but only to about 40 per cent of capacity. Then on Monday, the company said that would drop to 20 per cent, stating on its social media accounts that it was "shutting down one more gas turbine engine produced by Siemens".
Hours before the announcement, the chief of Germany's agency that regulates utilities, Klaus Müller, said the country's storage facilities had reached 65.9 per cent of capacity, on track to reach the goal of 75 per cent by the beginning of September. Now that is in question.
The European Commission conservation plan calls for shared sacrifice — with the promise of aid to the countries that run into the deepest trouble — on the rationale that the EU economy is so integrated that a blow to one nation is a blow to all. That is especially true since the most immediately vulnerable country, Germany, is the continent's economic powerhouse.
Some member states in the bloc's south and beyond that use little gas or do not buy it primarily from Russia say the commission's proposal makes little sense, but a version of it could survive a vote. Unlike EU sanctions and the partial oil embargo, which require unanimity, the gas conservation plan needs only a "reinforced majority", meaning the backing of 15 member states representing 65 per cent of the EU population.
The commission wants to put itself in charge of declaring an energy emergency if gas stocks fall below a certain level, allowing it to enforce mandatory rationing of gas. Such an unusual boost to its normal powers is unlikely to be accepted by EU countries, which do not like to cede autonomy to the bloc.
Intensive talks to prepare for the meeting over the past few days have centred around making adjustments to soften the proposal, to make it shorter in duration and to put national governments in EU capitals, rather than the EU bureaucracy in Brussels, in charge of implementing it.
This article originally appeared in The New York Times.
Written by: Melissa Eddy and Matina Stevis-Gridneff
© 2022 THE NEW YORK TIMES
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