Europe prepares for a winter without gas from Russia. It can go very wrong if there is no solidarity

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We are in the middle of summer, but Europe is already beginning to make moves for what is considered to be a very harsh winter for the energy sector. While Gazprom has announced that the Nord Stream 1 gas pipeline will only operate at 20% of its capacity, the European Union has closed this week a agreement to reduce gas consumption. A pact between the 27 energy ministers where not all have defended the same positions. While countries like Germany are directly affected, Spain defends the exceptional nature of the Iberian Peninsula.

The new Iberian gas exception. Europe will reduce gas consumption by 15% starting in August, with the idea of ​​reaching winter with more reserves. However, Spain flatly refused. Y finally managed to get away with it. Once again, the energy regulations agreed by the European Commission will be applied differently to Spain and Portugal.

A 15% cut has been proposed on a voluntary basis, which will become mandatory in the event that an energy emergency is declared. However, Spain will decrease consumption between 7 and 8%. This level is enough not to have to introduce any mandatory rationing measures, but rather savings and “flexibility” measures, as described by the Ministry for the Ecological Transition.

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Exceptions and more exceptions. Achieving a common energy policy throughout Europe is very difficult. Each country has a different profile and is affected on a different scale. The energy agreement has multiple exceptions, not only that of Spain. Among them we find specific measures for countries that have a system connected to Russia like Estonia, another for countries that are on an island like Ireland, another for those that have critical infrastructures that depend on gas and another for those that manage to have reserves above 80%.

There are two other additional exceptions, which are the ones that Spain will accept. The first is that of having limited interconnections and the second is those countries where gas consumption has increased by more than 8% in the last year. Those countries that meet any of these conditions will be able to cut gas consumption by a smaller amount. What happens is that in practice, a large number of countries will be able to cut less gas than initially planned.

darts to germany. It is one of the countries most affected by the lack of Russian gas. And Europe is letting them know that. From Spain the messages and declarations have been quite evident. “We are supportive but you cannot ask us for a disproportionate effort”, Minister Teresa Ribera commented. “Spain had not lived above its energy possibilities.”

The famous European solidarity relives a critical episode. At the time of the banking crisis Germany had to divert funds to the southern countries. Now the situation is the opposite. Spain, Portugal, Ireland, Greece or Italy, to a lesser extent, do not depend as much on Russian gas as Germany. Olaf Scholz, German Chancellor, calls for “unity” in Europe and hopes that “the member states do not selfishly block European decisions.” In response, Minister Ribera from Spain stressed the need to show “solidarity”.

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Gas breaks records above €200/MWh. While Europe is arguing, the price of gas continues to skyrocket. This week the TTF index reached €227/MWh. A heart attack price that shows the seriousness of the situation. To get an idea, in the middle of winter 2021 the gas reached its then record. They were €180/MWh.

One of the reasons is the reduction in supply from the Nord Stream gas pipeline. Of the 66 mcm/d in recent weeks, as of today it is only sending about 33 million cubic meters per day. The excuse is the lack of a Siemens turbine blocked in Canada due to economic sanctions.

If it weren’t for the cap on gas, the price of electricity in Spain would be skyrocketing. Countries like France these days have an energy price that exceeds €500/MWh. At these levels, the viability of some companies that require a lot of electricity is beginning to be seriously affected.

The gas war leads Europe into recession. “High energy costs will lead Europe into recession”, S&P Global Market analysts say. Exceptionally high gas and electricity prices now contribute to inflation, but will make German and European industry less competitive, leading to a loss of consumer confidence. A difficult situation to sustain, fueled by Putin and where each country in Europe reflects on its own energy model.

We are in the middle of summer, but Europe is already beginning to make moves for what is considered to…

We are in the middle of summer, but Europe is already beginning to make moves for what is considered to…

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