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Russia gas squeeze threatens Europe's stockpiling plans

·3-min read

With France becoming the latest country to be cut off from Russian natural gas, and supplies sharply reduced in Italy and Germany, Europe's summer stockpiling plans are looking shaky.

As the war in Ukraine nears its fourth month, Moscow is hitting Europe -- which gets some 40 percent of its gas from Russia -- where it hurts.

Several European countries, including Italy and Germany, are highly reliant upon Russian gas for their energy needs and Italian Prime Minister Mario Draghi has bluntly accused energy giant Gazprom of lying over the reasons for the cuts.

Europe uses less gas in summer months as it does not need to heat buildings, but countries are racing to replenish their reserves for the following winter.

The EU wants the gas storage infrastructures of its member states to be filled to at least 80 percent of their capacity by November.

The gas squeeze, which pushes prices up, "has consequences, not immediately on consumption, but on stockpiling", Draghi said Thursday, adding that Italy's reserves were at 52 percent.

- 'Gas as weapon' -

The reduction in supplies will also be costly for manufacturers -- especially in countries like Germany, where factories in the chemical, steel, cement and fertiliser industries need huge quantities of gas.

"The Russians have been using gas as a weapon for a long time," Thierry Bros, a professor at the Sciences Po university in Paris, told AFP.

"The Kremlin uses the principle of uncertainty, one day something and the next day something else, to... stretch the commodities market and drive up prices".

Poland, Bulgaria, Finland and the Netherlands have had their natural gas deliveries suspended over refusing to follow Russia's demand that it be paid in rubles.

The latest blows hit France Friday, where operator GRTgaz said it had not received any Russian gas by pipeline since 15 June, and Italy, which faced a third day of reduced supplies.

On Friday, Europe's reference natural gas price, Dutch TTF, reached 130 euros ($137) per megawatt/hour compared to 100 euros on Wednesday -- and 30 euros a year earlier.

- Breaking European unity -

France had been relying on Russia for about 17 percent of its gas, most of which arrived via pipeline, with the rest being brought in in liquid form by LNG ships.

The reason for the cut is unknown -- but follows a 60 percent reduction in deliveries to Germany via the Nord Stream 1 pipeline.

Italy's Eni said it will receive only 50 percent of the gas requested Friday.

Draghi has rejected Gazprom's excuses, saying the reasons "we are told, are technical".

"We and Germany and others believe that these are lies".

The Russian company, he insisted Thursday, was using gas for "political" ends.

Germany's economy and climate minister, Robert Habeck, has described the gas cuts as "a showdown with (Russian President Vladimir) Putin".

"This is a decision he is making arbitrarily - that's how dictators and despots act."

Gazprom, however, says Moscow has every right to play by its own rules over the cuts.

Bros at Sciences Po said Gazprom "does not need any justification".

"It is cutting in a differentiated way to break European unity."

EU countries have scrambled to wean themselves off Russian energy but are divided about imposing a natural gas embargo because several member states are heavily reliant on Moscow's supplies.

Some are considering installing new terminals to boost their capabilities for liquefied natural gas (LNG).

France has already greatly upped purchases of LNG since the February invasion and its terminals are close to their maximum, according to GRTgaz.

The country has become the largest buyer of Russian LNG in the world, according to Lauri Myllyvirta, an analyst at the Centre for Research on Energy and Clean Air (CREA), which published a report on Russian oil and gas sales this week.

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