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Europe compromises on Russian gas cuts 

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EU countries approved a diluted emergency plan to curb gas demand after striking compromise deals to limit the cuts for some as they brace for further Russian reductions in supply.

Europe faces an increased gas squeeze from Wednesday when Russia’s Gazprom said it would cut flows through the Nord Stream 1 pipeline to Germany to a fifth of capacity.

With a dozen EU countries already facing reduced Russian supplies, Brussels urges member states to save gas and store it for winter.

They fear Russia will completely cut off flows in retaliation for Western sanctions over its war with Ukraine.

Energy ministers approved a proposal for all EU countries to reduce gas use by 15% from August to March.

The cuts could be made binding in a supply emergency, but countries agreed to exempt others and industries after some governments had resisted the EU’s original proposal to impose a binding 15% cut on every country.

German Economy Minister Robert Habeck said the agreement would show Russian President Vladimir Putin that Europe remained united in the face of Moscow’s latest gas cuts.

“You will not split us,” Habeck said.

Hungary was the only country that opposed the deal.

Russia’s Gazprom has blamed its latest reduction on needing to halt the operation of a turbine – a reason dismissed by EU energy chief Kadri Simson, who called the move “politically motivated”.

Russia, which supplied 40% of EU gas before it invaded Ukraine, has said it is a reliable energy supplier.

The EU deal would exempt from the binding 15% gas cut countries such as Ireland and Malta that are not connected to other EU countries’ gas networks, and Cyprus doesn’t use gas.

Early on Tuesday, the benchmark front-month Dutch contract rose almost 10% and is more than 450% higher than a year ago, although down from record highs touched shortly after Russia began its invasion of Ukraine.

Countries that meet an EU target for filling gas storage by August could face weaker targets – softening the cuts for roughly a dozen states, including Germany and Italy, based on current storage levels.

They can also exempt the gas they use in critical industries, such as energy-intensive steelmaking, from the target.

Uneasy alliance

Those with a limited ability to export gas to other EU countries can request a lower target, provided they export what they can.

That could include Spain, which does not rely on Russian gas, and has said cutting its own demand would not help other countries since it lacks the infrastructure capacity to share spare fuel.

The EU plan has tested countries’ solidarity, with Greece and Poland among the countries opposed to mandatory gas cuts.

Polish Climate Minister Anna Moskwa said the deal would impose no constraints on Poland’s gas use and opposed the idea that a country should curb its industrial gas use to help other states facing shortages.

Some EU diplomats raised concerns that the number of opt-outs in the final regulation may mean it fails to ensure countries save enough gas for winter.

Although governments, including Germany, Europe’s biggest gas user, have upped their energy saving measures, EU countries have reduced their combined gas use by only 5%, despite months of soaring prices and dwindling Russian supplies.

“Fifteen percent will probably not be enough given what the Russians have just announced,” Irish Environment Minister Eamon Ryan said.

The deal requires backing from a majority of countries to trigger the binding gas cuts after many opposed the Commission’s original proposal that it has the final say. (source Reuters)