Gazprom halts pipeline gas flow in new jitters for Europe

LUBMIN, Germany - Russian energy giant Gazprom suspended gas deliveries to Germany for maintenance on a major pipeline on Wednesday, the latest in a series of supply halts that have fuelled an energy crisis in Europe.

Gazprom said supplies via Nord Stream 1 were "completely stopped" for "preventative work" at a compressor unit, shortly after the pipeline's operator, Entsog, announced that deliveries had stopped.

The move comes as European countries have faced soaring energy prices since Russia invaded Ukraine in late February and subsequently curbed its gas deliveries to the region.

Germany, which is heavily dependent on Russian gas, has accused Moscow of using energy as a "weapon".

But Gazprom has said the three-day maintenance work was "necessary" and had to be be carried out after "every 1,000 hours of operation".

Germany's Federal Network Agency chief Klaus Mueller has called it a "technically incomprehensible" decision, warning that it was likely just a pretext by Moscow to wield energy supplies as a threat.

Experience shows that Moscow "makes a political decision after every so-called maintenance", he said, adding that "we'll only know at the beginning of September if Russia does that again". 

With winter around the corner, European consumers are staring down the barrel of huge power bills. Some countries like France have warned that rationing is a possibility.

The European Union is preparing to take emergency action to reform the electricity market in order to bring galloping prices under control, with energy ministers scheduled to hold extraordinary talks next week.

Asked if gas supplies would resume after the three-day works were completed on Saturday, Russian government spokesman Dmitry Peskov said "there is a guarantee that, apart from technical problems caused by sanctions, nothing interferes with supplies".

Western capitals "have imposed sanctions against Russia, which do not allow for normal maintenance, repair work", he added, in what appeared to hint at a replay of an earlier round of start-stop rigmarole.

Gazprom had already carried out 10 days of long-scheduled maintenance works in July. While it restored gas flows following the works, it drastically dwindled supplies just days later, claiming a technical issue on a turbine.

The Russian company insists that a key turbine could not be sent to Russia because of sanctions on Moscow. But Germany, where the turbine was located, has said Moscow was itself in fact blocking the turbine's delivery to Russia.

An official at Gascade, which operates the distribution network within Germany, also viewed Gazprom's latest actions sceptically.

"In July, it was regular maintenance planned for a long time by Nord Stream 1, this time it was not planned and we don't know what is behind this operation," the official said on condition of anonymity.

A day ahead of the new shutdown, Chancellor Olaf Scholz said Germany was now "in a much better position" in terms of energy security, having achieved its gas storage targets far sooner than expected.

Europe as a whole was also getting a march on filling its gas storage tanks. On Sunday, storage levels were already at 79.9 percent of capacity in the EU.

At the same time, fears over throttled supplies have also driven companies to slash their energy usage.

Germany's industry consumed 21.3 percent less gas in July than the average for the month from 2018 to 2021, said the Federal Network Agency.

Mueller has said such pre-emptive action "could save Germany from a gas emergency this winter".

And Europe's biggest economy was already racing to turn its back on Russian gas. 

At the German coastal city of Lubmin, where Nord Stream 1 comes onshore, plans are already well underway for the switch to liquefied natural gas (LNG).

The LNG, transported in by ships, will arrive at Lubmin's industrial port and be converted back into gas and pumped into Gascade's distribution network, which has so far been used to funnel Russian gas around the country.

"We expect to be able to inject gas into the distribution network on December 1," said Stephan Knabe of Deutsche ReGas -- the company managing the LNG project.

The company believes that up to 4.5 billion cubic meters of gas can be imported via the Lubmin LNG terminal alone, making up around eight percent of Nord Stream 1's capacity.

Agence France-Presse

Romania could challenge Russian grip on Europe's energy

BUCHAREST - Romania, one of the EU's poorest members, could emerge as an unlikely challenger to Russia's iron grip on eastern Europe's energy supply thanks to vast oil and gas reserves waiting to be tapped, experts say.

Its hydrocarbon riches already give Romania a high degree of energy self-sufficiency, but there are many more untapped reserves under the Black Sea, attracting the attention of the world's oil and gas majors.

Some, including US giant ExxonMobil and Austria's OMV Petrom, have started drilling in the Black Sea.

"Romania's position as a potentially significant gas producer in this region is unique and the resources here may pose a threat to what has been mostly a Russian monopoly," said Mark Beacom, CEO of Black Sea Oil & Gas, a company owned jointly by the Carlyle Group and the European Bank for Reconstruction and Development. 

But the energy majors have put their ambitions on hold after Bucharest passed legislation that will tax revenues from offshore drilling and stipulate that half of output must be reserved for the domestic market -- even though the country still lacks much of the infrastructure needed to distribute and consume it.

Romania currently produces about 10.5 billion cubic metres of gas each year, largely onshore, and consumes 11-12 billion cubic metres, making it almost completely independent from Russian gas unlike its eastern European neighbours.

According to varying estimates, further untapped reserves of between 170 and 200 billion cubic metres lie deep in the Black Sea that could be extracted by 2040.

That represents the equivalent of Romania's total annual consumption for 15 years, and four years' consumption of a country such as France.

It was the former communist leader Nicolae Ceausescu who first launched an offshore drilling project in the Black Sea 50 years ago.

And now Romania could "become a regional hub and contribute to Europe's energy security," the Energy Ministry told AFP. 

RUSSIAN STRONGHOLD 

Russia is one of the biggest suppliers of oil and gas to Europe, a stranglehold that the West has long tried to break in view of recurring geopolitical tensions between the former Cold War foes.

In the 2000s, a dispute between Russia and Ukraine left Europeans shivering in the middle of winter when Russian giant Gazprom cut supplies to the West.

"The volume of (offshore) reserves can turn Romania into the main EU gas producer, after the UK leaves the bloc," Razvan Nicolescu, a consultant with Deloitte told AFP.

To capitalize on this, authorities have started work on the Romanian stretch of the BRUA pipeline, a 479-kilometer (308-mile) artery, partly financed by the European Commission, that will also cross Bulgaria, Hungary and Austria, and transport gas from the Caspian and Black Seas to Central Europe.

But the plan can only proceed "if the gas companies decide to go ahead with their investments," Nicolescu said.

And therein lies the catch.

In October, the Romanian parliament passed a law introducing progressive taxation on revenues from offshore drilling and stipulating that half of the gas produced must be sold on the local market. 

INVESTMENT ON HOLD 

The government hopes the new legislation will bring in up to $20 billion (17.5 billion euros) over the next 20 years.

But companies are getting cold feet and putting their plans on hold. 

"There are no assurances that the industry will move forward particularly with these proposed fiscal terms," BSOG CEO Beacom said.

Christina Verchere, CEO of Austria's OMW Petrom, said that "we are currently assessing the impact of the offshore law but we do not see a final investment decision (possible) in the fourth quarter of 2018" as initially planned. 

The Romanian Black Sea Offshore Titleholders Association (RBSTA), whose members have invested more than $2.0 billion over the past 10 years, have also criticized the bill. 

Experts point out that Romania lacks the infrastructure to consume half of the estimated offshore gas production -- barely one in three households is connected to the gas network, while rural Romania overwhelmingly uses wood for heating.

But the government is standing firm. 

"Having gas simply transit the country and contribute to the neighboring nations' development would be unpardonable", said the head of the ruling Social Democratic Party, Liviu Dragnea, regarded as Romania's de facto prime minister.

Reversing the legislation "would be tantamount to treason," echoed the government's main economic adviser, Darius Valcov.

As a result, investors are keeping cautious. 

"Romania is in an enviable position," Beacom stressed, but the new proposals "are very onerous and will likely make (it) uncompetitive compared to other offshore jurisdictions."

source: news.abs-cbn.com