Energy and powerNews

EU energy ministers address gas supply cuts in Europe

The meeting of the Transport, Telecommunications and Energy Council was organised in the wake of cuts by Russia’s state owned energy supplier Gazprom to Bulgaria and Poland following their refusal to pay for gas supplies in roubles.

The ministers strongly condemned the unilateral decision taken by Gazprom and reaffirmed that all suppliers must execute their obligations as settled in the contracts.

In reference to the Russian decree relevant for gas importers, the ministers reiterated the obligation of full compliance and consistency with the existing restrictive measures adopted in respect of Russia and their commitment to work closely with operators to follow a common approach on gas payments.

The two countries had already planned to stop using gas from Russia this year but the actions by Gazprom have raised the spectre of similar actions towards other countries, in particular Germany.

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Thus, a key focus for the meeting was security of supply and preparedness in the event of a supply crisis but updates indicated that at present at least, there is no immediate risk of gas disruptions to consumers or industry.

In this context the ministers committed to coordinating work to reaching the best possible storage levels across the EU, securing alternative deliveries from reliable suppliers and continuously monitoring the preparedness of the energy systems, including exchanging information on gas consumption.

“This situation strengthens the need to accelerate the planned phase out of the EU’s dependency on Russian gas, oil and coal imports as soon as possible”, states the Council’s presidency summary of the meeting, which took place in Brussels on May 2.

Looking further ahead, it is expected that the regulation on gas storage will be accelerated, while the REPowerEU plan being developed as a response to the supply crisis and due for release later in May should set out concrete actions, including diversifying gas supplies, accelerating renewables’ deployment, promoting further energy efficiency and energy savings and strengthening infrastructures.

All of these will, however, require additional sources of funding and it is not clear where this will come from, particularly with consumers across the region already facing increased energy costs.

Despite these developments the situation remains in a state of flux, with the European Commission having suggested a full embargo on Russian oil with the potential repercussions that could have.

“It’s inconceivable that sanctions won’t have consequences for our own economy and for prices in our countries,” Robert Habeck, Germany’s economy minister and deputy chancellor was quoted as saying.

“We as Europeans are prepared to bear [the economic strain] in order to help Ukraine. But there’s no way this won’t come at a cost to us.”

With Europe going into summer the region has some breathing space as overall gas consumption should ease, but nevertheless countries will have their work cut out to achieve the level of independence envisaged before the next winter.

And whether the eastern European countries such as Hungary and Slovakia which are most heavily dependent on Russian imports can or will comply or whether the divisions with the ‘western’ countries grow remains to be seen.