Robert Habeck, Germany’s economy minister, said earlier this month that the country should “prepare for the worst”. “Anything can happen. Gas can flow again, even more than before. Nothing can come,” Habeck said in a radio interview. The pipeline delivers 55 billion cubic meters of natural gas annually to Europe, or about 40% of its total imports from Russia. A complete cut off with Moscow gas is not out of the question. The country has already cut its natural gas exports to several European countries. Last month, Germany, the region’s largest economy, declared a “gas crisis” after Gazprom, Russia’s state gas company, cut exports through the pipeline by 60 percent. Gazprom blamed the move on the West’s decision to halt vital turbines due to sanctions. German gas distributor Uniper confirmed on Monday that it had received a letter from Gazprom claiming force majeure for past and current shortfalls in gas deliveries. Force majeure is a contract clause that excuses a company from failing to fulfill its obligations. It is usually invoked in extreme circumstances such as natural disasters. However, a Uniper spokesperson told CNN that it “officially denied” the claim. On Monday, the embattled company also withdrew a 2 billion euro ($2.04 billion) credit facility with KfW bank due to the impact of Russian gas supply disruptions.
Terrible timing
A gas crisis this week would also come at the worst possible time. Europe is sweltering under record heat – parts of France and Spain are battling wildfires as temperatures are expected to soar above 40 degrees Celsius (104 degrees Fahrenheit) in the coming days. Rising temperatures have pushed demand for electricity to power air conditioning units. Enagas, the operator of Spain’s natural gas transmission system, said last week that demand for natural gas to generate electricity reached a new record of 800 gigawatt hours. “This huge increase in natural gas demand for electricity generation is mainly due to the high temperatures recorded as a result of the heat wave,” Enagas said in a press statement last Thursday. Some analysts were more optimistic, given Europe’s alternative power sources and the fact that the heatwave is set to end by midweek. “Although energy consumption in the EU will be slightly higher this week amid the heat wave due to high usage rates of air conditioning units, this will be offset by the record supply of solar power generation,” said Henning Gloystein, director of energy, climate and of resources at The Eurasia Group, he told CNN Business. Meanwhile, European countries are scrambling to fill their gas storage facilities to avoid a potentially catastrophic winter energy shortage. “The next few months will be critical” to shore up the bloc’s supplies, Fatih Birol, executive director of the International Energy Agency, said in a press statement on Monday. “If Russia decides to cut off gas supplies completely before Europe reaches storage levels of up to 90%, the situation will be even more serious and challenging,” he added. Gas storage levels across the European Union are currently around 64%, according to Gas Infrastructure Europe. The bloc hastily secures gas supplies from other countries as it curbs imports of Russian gas. On Monday, the European Commission signed a memorandum of understanding with Azerbaijan to double the capacity of a key natural gas delivery route in the coming years. Prices for Dutch natural gas, the European benchmark, rose 3 percent to 165 euros per megawatt hour on Monday from Friday, Intercontinental Exchange data showed. Earlier this month, fears of a major gas outage pushed prices to their highest levels since the early days of Russia’s invasion of Ukraine, hovering around 183 euros ($186) per megawatt hour. Prices have increased by 129% since the beginning of the year. — Julia Horowitz, Sharon Browne-Peter, Sharon Braithwaite and Chris Liakos contributed reporting.
