PARIS—European producers are making ready for potential natural-gas rationing that may pressure them to close manufacturing amid fears that Russia is about to chop off gasoline deliveries by way of its foremost artery to Europe.
On Monday the Nord Stream pipeline, which runs 760 miles from northwest Russia underneath the Baltic Sea to Germany, will go into annual upkeep for 10 days, repairs which are routine in peaceable instances. European officers say that Moscow, which has already reduce gasoline deliveries to 40% of the pipeline’s capability, won’t deliver it again on-line.
The Kremlin says it plans to proceed supplying gasoline by way of the pipeline as soon as the upkeep is full and that any disruptions are the fault of Western sanctions that it says have blocked supply of a turbine for the pipeline that’s being repaired in Canada. European capitals, nevertheless, say Moscow is wielding its gasoline provide as a weapon, lowering the pipeline’s deliveries final month in retaliation for his or her assist of Ukraine.
Canada on Saturday stated it might ship the turbine to Germany after weeks of discussions with the German authorities. Berlin needs to return it to Russia, saying the transfer would present that Moscow has been utilizing the turbine as an excuse for a political resolution to chop gasoline deliveries to Europe.
Europe has sufficient gasoline for now, however the area’s producers are bracing for a winter with out Russian provides. Some, needing chemical substances for manufacturing which are made with pure gasoline, wish to import them from areas outdoors Europe the place the gasoline is extra plentiful. Others are planning to modify from pure gasoline to different fuels the place they will. And some producers concern they might haven’t any alternative however to close down fully.
“There are no easy solutions if we get into a curtailment situation,” stated
Svein Tore Holsether,
chief government of
Yara International AS
A, the world’s largest fertilizer producer.
Europe was relying on Russian gasoline to top off for the winter when consumption peaks. Without Russian deliveries, officers concern shortages might seem as temperatures fall. Since Russia invaded Ukraine in February, Europe has been shopping for document quantities of liquefied pure gasoline from the U.S. and different non-Russian exporters, however these deliveries will not be sufficient to exchange Russian gasoline, which final yr accounted for 40% of the European Union’s total provide of the gasoline.
Russian President Vladimir Putin on Friday warned the West in opposition to imposing additional measures in opposition to Moscow.
“Sanctions restrictions against Russia cause much more damage to precisely those countries that impose them,” Mr. Putin stated at a authorities assembly. “Further use of the sanctions policy could lead to even more severe, even catastrophic, consequences in the global energy market.”
Uniper
SE, one among Europe’s largest utilities, on Friday requested a bailout from the German authorities after being hit laborious by dwindling gasoline provides from Russia. Uniper, which is Germany’s largest importer of Russian gasoline, has needed to make up the distinction within the spot market, paying larger costs for that gasoline. France, in the meantime, is transferring to nationalize vitality big
EDF SA,
which has been shedding billions of euros underneath a government-imposed cap on electrical energy costs.
The continent’s energy-intensive industries are discussing with governments whether or not they can cut back gasoline consumption to order scarce provides for households when winter arrives.
Yara, which has 15 manufacturing websites throughout Europe, makes use of pure gasoline to supply ammonia, the important thing ingredient for nitrogen fertilizer. Yara within the first week of July was operating its ammonia operations at near full manufacturing, however Mr. Holsether stated the corporate can ramp down and import ammonia from its different websites in markets world wide the place pure gasoline is extra plentiful. The firm has taken that step a number of instances over the previous yr when confronted with spikes in Europe’s natural-gas costs. There are limits to the corporate’s flexibility, Mr. Holsether stated.
“Ammonia-producing assets aren’t really designed to be ramped up and down with fluctuating prices,” he stated.
German producers, the motor of European trade, are speeding to organize for a potential Russian cutoff.
Hamburg-based
Aurubis AG
, one of many largest copper producers in Europe, stated it was seeking to substitute gasoline with electrical energy and oil. Gas, nevertheless, stays the important thing gasoline for a lot of of its processes and can’t be changed within the quick time period, together with for a number of the work at its Hamburg smelter the place greater than 2,000 employees produce wires, cathodes and valuable metals.
The swap to various vitality sources has been additional difficult by the worldwide supply-chain disruptions. Aurubis estimates the shift might take as much as a yr.
German firm Ritzenhoff AG operates in one of many world’s most energy-intensive industries: glass making. Most of the vitality consumed in glass manufacturing comes from natural-gas combustion used to warmth furnaces to soften uncooked supplies and type glass. The gasoline retains what Axel Drösser, the chief government, describes as a “glass soup” boiling in tanks at over 2,700 levels Fahrenheit.
SHARE YOUR THOUGHTS
Do you suppose the EU is prepared for vitality independence? Why or why not? Join the dialog beneath.
“Natural gas cannot be substituted here. If there is no gas, the ovens have to be switched off and production comes to a standstill,” he stated. In the occasion that manufacturing shuts down, the tanks could possibly be broken if left idle.
Mr. Drösser stated the corporate, which sells its wares in additional than 100 nations, has been attempting to scale back its gasoline consumption together with through the use of some hydrogen. “However, an ad hoc substitution of gas in glass production is not possible with the given infrastructure,” he stated.
Looking at a winter with out Russian gasoline, Ritzenhoff has developed two situations: a “holding operation,” the place manufacturing stops however a minimal quantity of glass continues to be stored liquid to protect the tanks, and an entire shutdown.
The Coatinc Company Holding GmbH, one among Germany’s oldest family-run companies at over 500 years outdated, supplies a vital service for a lot of industries utilizing metal: galvanizing, or dipping the metal into molten zinc in large kettles, to forestall corrosion. To soften the zinc, it’s 90% depending on gasoline.
While Coatinc is seeking to swap to electrical energy long run, it might take a number of years and an funding of round 16 million euros, equal to $16.4 million.
But if the gasoline stops this winter, so will the corporate’s manufacturing. In that case, Paul Niederstein, the chief supervisor, hopes he would have two weeks’ discover in order that the agency can pump out some 7,000 tons of liquid zinc from the kettles, cool it down and retailer it.
Mr. Niederstein stated he’s at the moment attempting to steer German authorities, who would determine who will get gasoline within the case of rationing, that his trade is crucial and needs to be given precedence.
“Galvanized steel is used to construct solar fields and other renewable-energy infrastructure,” he stated. “We’re not making chocolate here.”
Some corporations that had deliberate to make use of gasoline as a substitute of oil or coal as a part of plans to scale back carbon-dioxide emissions at the moment are backtracking due to the looming gasoline scarcity.
Volkswagen AG
operates two coal-fired energy vegetation at its headquarters in Wolfsburg, Germany, which offer warmth and energy for the plant and town. In 2018, VW stated it might make investments €400 million to shift to gasoline, saving 1.5 million metric tons a yr in CO2 emissions.
The shift was anticipated to be accomplished by the top of this yr. But after Russia’s invasion of Ukraine and the next gas-supply disaster, VW CEO
Herbert Diess
stated the corporate might lengthen the usage of coal.
Write to Matthew Dalton at [email protected] and Georgi Kantchev at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Source: www.wsj.com”