EU releases plan to cut energy demand as Putin warns on Nord Stream

Mikhail Mishunin

The main artery for Russian gas to European Union, otherwise known as Nord Stream 1, has been offline for most of the past two weeks due to pre-scheduled annual maintenance. However, many Western nations are growing concerned that Moscow could permanently turn off the flows, which are used in everything from heating and cooking to electricity and power generation. Russia supplies the the bloc with 40% of its natural gas imports, and in nations like Germany, that figure is as high as 60%.

The conditions: In comments following his visit to Iran, Vladimir Putin said that Gazprom (OTCPK:OGZPY) - the pipeline operator's majority shareholder - has "always fulfilled its obligations," but warned that sanctions could impact future transfers. He specifically referenced a turbine that was undergoing repairs in Canada (which has leveled penalties on Moscow) and another turbine that will go for maintenance on July 26. Flows could fall to some 20% of capacity if the turbine isn't returned soon, but European officials have dismissed the explanation as a pretext to wreak economic havoc on the continent.

"It's absolutely clear that Moscow is cutting supplies for geopolitical reasons," declared Tim Ash, senior strategist at Bluebay Asset Management. "It wants to create a European gas crisis this winter to bring Europe to its knees to the point where it cuts support to Ukraine."

Go deeper: Gas shortages have already undermined the euro, which is now at parity with the dollar, and added to the risks of a looming European recession. At the same time, the European Commission published plans today to press governments on stepping up their energy conservation campaigns. Countries would be expected to reduce consumption by at least 15% over the next eight months, while switching from natural gas to other energy sources like nuclear and coal.

ETFs: UNG, UGAZF, DGAZ, BOIL, FCG, KOLD, UNL, GAZ

Comments

[Soyunmoron]

I am holding several Russian ADR and now in deep shlt. Interactive Brokers just issued an announcement they will not be involved in exchanging these ADR for the common shares. My understanding is that the ADR are held in street name so the issuing bank could not deal with me directly for they have no information on me at all. How can the brokerage firms wash their hands like this ?

[MikeKorea]

@Soyunmoron I guess you will need a brokerage account in Russia? If I were you I would contact Russian brokerages for help… Because the common shares can probably only be held (and traded) in Russian accounts. There may be Russian investors who held ADRs and who need to change them to common stocks using their local brokers‘ help. Just an idea, it is what I would attempt to do, certainly a very messy situation that you are in…

PS: if I remember correctly Putin said that overseas investors could open local Russian accounts…

[kiriak]

European politicians are simple clowns following the instructions of Whashington. They have accepted the American sanctions to Russia without having any alternatives for their gas. Only super stupid people could not have imagined what was going to happen later. Ursula von der Leyen is a clown. A person without ideas or any project who is going to drive Europe and its citizens to a really serious pain. Congrats for the super inflation that you are creating by following the NATO and US recommendations!

[David-McCormick]

Let's give common sense a chance to prevail. Hopefully, Siemens will be allowed to repair and return the pumping turbine to NORDSTREAM #1 without political interference. Hopefully, NORDTREAM #1 returns to service and is allowed by politicians to honor its gas supply service contracts to Uniper and others. Hopefully, Uniper and others will be allowed to pay for their services without political interference and the people of Europe will get a lower price for gas going forward. I tire of politicians on ANY side abusing their powers to restrain free trade.

[Holger Investor]

@David-McCormick The gas turbine is only a pretext.

The western nations are in a De-Facto war with Russia.

For Putin it make sense to keep the gas flow low to keep prices high and to prevent the Europeans filling their storages in summer. It further make sense for Putin to make the Europeans afraid by erratic increases and decreases of the gas flow.

Helpful would be to put all the closed nukes back in service asap. Helpful would be to put all coal fired power plants and other facilities back in service asap. Helpful would be to lift the bans on fracking in France, Germany and other countries.

It is to live the green religion with such dogma as "climate change", "renewable energies", diabolic radiation more symbolic.

[Brian Cellars]

@David-McCormick Canada agreed to return the turbine last week, so that's old news. Russia may still decide to cut of supplies so the EU still needs to be looking for other options.

[David-McCormick]

@Brian Cellars Thanks for the update. I note that NS#1 did return to service -- I suppose awaiting the turbine arrival and installation. It looks like GAZPROM (or Russia) will try to maintain gas flows to paying customers.

[bobcowman]

"It's absolutely clear that Moscow is cutting supplies for geopolitical reasons," declared Tim Ash, senior strategist at Bluebay Asset Management. "It wants to create a European gas crisis this winter to bring Europe to its knees to the point where it cuts support to Ukraine."

Europe has dealt with bullies before and will not bow to Russia. I'd like to think they are tough and ready to endure trials for the sake of defeating Putin's megalomanic invasion of Ukraine.

[mac ron]

This is a classic case of “be careful what you wish for, you might get it” Placing sanctions on Russia by reducing oil/nat gas imports, refusing to certify NS2, refusing to repair and return turbine etc, and then now are worried about Russia not delivering. Thats a like going on a hunger strike to protest. Very dramatic but not very smart.

Ironically, Russia has higher energy export revenues than before the war and a stronger ruble. You can not isolate someone with out them being isolated from you. Sanctions have created a bifurcated world economy. You can’t put this genie back in the bottle.

[Joe de Mencia]

there was once a man who was going around telling these ding dongs about these dangers. too bad they didn't like him for his skin tone.

[Holger Investor]

The West is De Facto in war with Russia. It make sense for Putin to use gas as one of his weapons. If he is clever he will keep the gas supply short to optimize the price/yield and to prevent the Europeans to fill their gas storages. He might play a bit to make the Europeans afraid and unnerve the West.

The main reason for the energy crises is the green religion with dogma as "climate change", "renewable energies" and nuclear fear. Fracking is more or less forbidden. Nuclear power plants were destroyed, coal is a religious sin the only tolerated modern source of energy is Russian gas.

Without the green religion Germany would have 28 nukes in operation. The production of lignite could be 100 M tons above the current. A loss of R gas supplies would be a challenge but far less serious than this religion made it.

[ziegle9876]

@Holger Investor End time sects have existed since mankind existed....

[Oakwood Partners]

The Europeans must be kicking themselves for listening to Biden to go along with this useless conflict in Ukraine and upsetting their supplies of natural gas, oil, food, fertilizer and so many other things. Now they're faced with a very agitated public looking at the possibly of literally freezing this coming winter and they only have themselves to blame. Furthermore, the tree hugging "brain trust" of Klaus Schwab acolytes running Germany has to be the biggest clown show on the planet next to Biden's regime. When faced with the possibility of having no natural gas from Russia to use for electricity generation, these idiots decide to go through with their ill-advised plan to shut down the last 3 remaining clean energy nuclear power plants in the country in favor of using coal of all things. This level of stupidity is beyond comprehension and parody.

[vooch]

@Oakwood Partners

Exactly - NS2 is just sitting there empty. In less than a week it could be flowing with dirt cheap gas more than enough for European needs.

Also, isn’t it a paradox, that the crisis with NS1 is due to Canada holding parts hostage. It’s kinda like Canada is punishing Germans.

[hegel]

@Oakwood Partners not really. Biden did not dictate anything, nobody really cares about him. The conflict was simply inevitable because Putin is a maniac.

European society is clear about where it stands. Unlike some Muricans acting like Russian trolls. Nuclear does not heat German homes, even if it was, it would only have negligible effect on the problem because its use was already limited before the war.

[Joe de Mencia]

@hegel shut up and enjoy your electric bills this summer.

[Fangorn]

The West is naive to think that delisting Russian Oil companies(eg Gazprom) and then implementing sanctions(which hits spare parts supplies) wont impact supply of Oil and Nat Gas..

Europe is basically cutting its nose to spite its face - why on earth did they(Angela Merkel) permit such over reliance on a hostile power?

[LK106218]

@Fangorn

Putin's invasion of Ukraine provides political cover for something many in the EU want, to reduce carbon dioxide emissions which won't be painless.

[MikeKorea]

@Fangorn Over the last 20 years the German economy has benefited immensely from the cheap Russian gas. In my view it was a good decision for the country, while it lasted…

[Richard Carleton]

@Fangorn Putin is already cutting his nose to spite his face by threatening to cut off natural gas this winter. He is demonstrating that his Russia cannot be safely depended upon. Just in time supply lines brought efficiency. Covid demonstrated their fragility. Putin's tactics as well as China's on rare earths demonstrate that a degree of inefficiency and inflation may be a preferable path rather than being blackmailed by the unscrupulous at the most inappropriate time.

[Rikki Tikki Tavi]

It is clear this can be resolved by supplying the Turbines.

[vooch]

@Rikki Tikki Tavi

Or allowing NS2 to be turned on. 😳

[LK106218]

Russia is running low on men and materials to continue in Ukraine and hopes to induce the EU to withhold materials from the Ukrainians. Two of the largest economies in the EU have slowed deliveries per reports, which may or may not be true. Russia risks even more sanctions and a permanent break with the EU. I have commented many times that the Russian economy is equivalent to the state of Texas or the nation Brazil. The loss is significant but manageable.

[Finding Your Retirement]

@LK106218 and in retaliation putin will have no other option but to start using nukes and completely cutting off gas supply to europe. Biden should have listened to Macron advice for brokering peace but because king potato and his 81 million voters don't care about Ukrainians lives they will essentially force a genocide to be proven right

[hegel]

Putin seems to be willing to let the gas flow as long as possible, albeit at a reduced rate. But everybody knows the train has got off the station. There is no benefit for Putin to cut the gas, because this will never lead Europe to yield to his wishes.

Germany is going to have to ration gas for its consumers, which is fine. Just drop the thermostats 2-3 degrees this winter and wear thick during the month of November. Western people have just become so cowardly these days, and the media is feeding off it by declaring every adverse event catastrophic. It is a small price to pay for what Ukraine is going through. In 2-3 years, Russian gas is going to be fully replaced and Putin will disappear into obscurity. Russian army is already scraping chips off washing machines of Ukranian widows. Happy to see them go back to dark ages.

China is probably the winner of all this. I won't be surprised if Putin sells Siberia to China in the future. He has become a good puppy for Xi Jinping.

[gdocr]

@hegel meanwhile you are ignoring the devastation. Are you blind? Germanys economy will be devastated. That’s the objective, not a couple of degree’s of warmth. People will die . Life savings will be lost and people will starve.
I beginning to think you are actually running this shit show.
Am I speaking with Joe?

[MikeKorea]

@gdocr that is delusional. Sorry.

[gdocr]

@MikeKorea I wish you were correct. Sri Lanka unfortunately is suffering the consequences of the same policies.

[smikhail]

"It's absolutely clear that Moscow is cutting supplies for geopolitical reasons," said Tim Ash, senior strategist at Bluebay Asset Management. "It wants to create a European gas crisis this winter to bring Europe to its knees to the point where it cuts support to Ukraine."

Henry Kissinger: "Control oil and you control nations."

[vooch]

@smikhail

Tim Ash is a war mongering crook. One day he’ll be tried for war crimes and recieve the Julius Streicher award

[JackWolf]

Considering what the EU, the UK and Germany all knew and already saw impacts from climate change 10, 20 years ago, it was nuts to not go all in with renewables. Instead they chose to stick with a finite fuel that wasn't produced within their borders. Dumb. Very dumb. But I also think the Americans helped keep them on these dirty fuels. After all, we're the pusher, especially since our import terminals were converted to become export terminals. Its not hard to see what's going down here.

[Contemplating Retirement]

@JackWolf it’s the renewables that assisted putting them in this dire position.
Do you understand how energy grids function ?
Full green energy is 20-50 years away. If ever.
Being dependent on wind , Sun and Putin were a recipe for disaster.

Merle’s left Germany in a total mess.

[rj4103]

@JackWolf , regarding renewables, I believe it is pretty well known that the EU deep dive into renewables has has not worked out well. Wind, solar, etc were always known to not be a reliable 24/7 source for power generation. Technology, ie Grid and Battery issues, are a major issue. Raw materials for batteries are also in short supply.

Transition over a longer period would have been much more sensible. Now, they are paying the price.

Unfortunately, The US (Current administration) wants to take the US down the same road. With a 100 years of Natural Gas, the US should never have an energy crisis like Europe. Now, the US can't build LNG export plants fast enough and the EU needs more import facilities.

Biden trying to push through more bad energy policy via Executive Order. When will the Public wake up!!!

[Liberalies]

@JackWolf Humans can’t control the climate.

[Tuco Ramirez]

Article doesn’t include any specifics on how consumption can be reduced by 15%? But, how quaint that the Euros now have to increase the use of coal and nuclear. To quote Saint Greta “how dare you!”

[JackWolf]

@Tuco Ramirez Once its built, nuke plants are considered carbon free. Its the concrete and other materials used in construction that gives it a huge carbon footprint. And hopefully they won't run out of cool water. I heard rivers are now drying up over there.

[Finding Your Retirement]

@Tuco Ramirez by doing what they're doing now. no charging evs between certain times, no school because of hot weather, public transit shut down at certain times, rolling brown outs, and everything on fire. You can't use electricity if your house is on fire

[rj4103]

@JackWolf , the key words you used as "once built" FYI, 2 New Nuke Plants are being built by GA Power. 6+ years late and way, way over budget. Don't rely on New Nukes for at least 10 years!!!

Plus, the avg age of Nuke Plants in the US is approaching 50 years, or about their Useful life. Many are slated for retirement very soon!!! That is currently 20% of US Power Generation.

A new combined Cycle Nat gas fired plant (maybe Hydrogen is a future fuel) can come on line faster than any other source and is 24/7.

[Potomac_85]

Buy the rumors sell the news.. nobody can rely on russian gas since it can be cancelled any time depending on the stage of dementia the current ruler is suffering from. And if you cant count on it to be available you pretty much cant use it other than as some "extra" supply.

[Liberalies]

@Potomac_85 Your talking about Biden or Putin?

[StandingWatch]

Next up, Europeans live in caves as a result of several poor energy policies.

On a positive note, their carbon footprint is said to comply with WEF mandates.

[jo blo5664]

@StandingWatch As per the old song:
"Suicide is painless
It brings on many changes..."

[JackWolf]

@StandingWatch Nah... The caves come into play as the impacts from abrupt climate change sweep the land. Literally.

[rj4103]

@JackWolf , And, what is your workable, reliable, solution today, next month, next year, etc? Build a new Grid and solve battery storage and then we can discuss this issue like adults