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National Grid in emergency bid to pump more gas to Europe

·3-min read
National Grid gas supplies Britain Europe energy crisis
National Grid gas supplies Britain Europe energy crisis

National Grid has asked for emergency permission to pump more gas to Europe as it races to fill up storage facilities ahead of a winter crunch.

Operators are ramping up the capacity of pipelines between Britain and the Netherlands to help boost stocks. National Grid has applied to the Joint Office of Gas Transporters for permission to increase the pressure on the 235km pipeline between Bacton, Norfolk, and Balgzand, Netherlands, so the pipeline can export 34pc more than normal.

It follows a request from BBL, the Netherlands-based operator of the pipeline, to maximise gas exports to “address existing gas supply shortages which are being experienced in continental Europe”, National Grid said.

“Enhanced resilience of supplies across Europe heading into the forthcoming winter can benefit the GB market by reducing likely demand for exports to Europe over the expected period of high demand from October 2022 as we move into the winter,” the Grid added.

Europe is racing to fill up gas storage sites ahead of winter amid concerns about further cuts in supplies from Russia. Moscow typically supplied about 40pc of Europe’s gas before the war but volumes have fallen since the invasion of Ukraine as the Kremlin retaliates against sanctions by “weaponising” fuel supplies.

The Nord Stream 1 pipeline to Germany was closed for ten days of maintenance, prompting fears it may not restart, but flows resumed this week at 40pc of capacity. That has put pressure on Europe, with the European Commission calling on member states to cut gas use by 15pc to stave off energy rationing.

Britain gets less than 4pc of its gas directly from Russia but is exposed to knock-on effects from Europe’s markets. It typically exports to Europe during summer and imports during winter, effectively making use of storage capacity on the Continent. It has been sending more than usual in recent weeks, effectively acting as a “bridge” to Europe for supplies of liquified natural gas shipped in from around the world.

Concerns over gas supplies have sent prices soaring and Germany was forced into a €16bn (£13.6bn) bail out of energy giant Uniper on Friday after it was crippled by high prices.

Berlin will take a stake of roughly 30pc in Uniper – a holding big enough to give it veto rights on important strategic decisions. Finnish owner Fortum will retain a majority stake.

The package includes an expanded credit line of €9bn from state-owned lender KfW and mandatory convertible securities of €7.7bn. The total package is worth more than four times the company’s current market value.

Uniper, which is Europe’s largest importer of Russian gas, asked for a bailout two weeks ago after it was pushed to the brink by Putin’s supply cuts.

The company’s extensive contracts with Kremlin-controlled Gazprom left it exposed and forced it to cover shortfalls at high prices on the spot market.

Chancellor Olaf Scholz on Friday reassured consumers that they would not be left to shoulder higher energy prices alone, promising a support package next year to help low-income families.