European gas prices on the Intercontinental Exchange rose 30%. Earlier, Russia announced that it would suspend the supply of natural gas through the Nord Stream 1 pipeline. The day after this announcement, the price of natural gas hit about $2,900. This comes at a time when Russia and EU countries are still engaged in a heated debate over responsibility for the shutdown of gas deliveries.
Kremlin spokesman Dmitry Peskov accused Europe that its politicians had made many mistakes and that they had to pay the price. Russian gas giant Gazprom blamed Western sanctions and technical problems for the closure of the Nord Stream 1 pipeline. The company said the issues barred the pipeline of equipment that ensured its proper functioning.
Franco-German cooperation
Against this background, French President Emmanuel Macron stressed that he will abide by the commitments made by France to provide Germany with more natural gas. In turn, he also wants Berlin to provide electricity to France.
He held a news conference after a video call with German Chancellor Olaf Scholz, in which he explained that France was working on completing the gas connection. This would facilitate the supply of French gas to Germany in the event of any situation requiring Franco-German unity.
Macron also said that, in turn, Berlin should voluntarily assume the role of producing more electricity and supplying it to France if Paris needs it. He stressed that alternative energy projects in France and Europe must be accelerated. He also noted that Paris supports the proposal for a joint European purchase of natural gas.
two nuclear power plants
On the other hand, the German magazine Der Spiegel reported that Germany will keep two nuclear power plants until mid-April 2023, rather than closing them at the end of 2022 as originally planned. The move is aimed at producing backup energy for winter.
The magazine also said the decision was made after the results of a stress test designed to test whether the power grid could meet energy demand in winter if Russian gas transmissions were halted or drastically reduced. The decision is expected to be announced by Economy Minister Robert Harbeck.
The two nuclear plants will remain connected to the grid. The nuclear power plant is located in southern Germany, an area where the energy infrastructure is particularly stressed. The remaining third nuclear power plant will shut down as originally planned.
energy weapon
On the other hand, a spokesman for the European Commission said that Russia could make up for the interruption of the Nord Stream 1 pipeline by sending natural gas to Europe through other pipelines. However, Russia has made the opposite choice.
He also said the move could prove that Moscow is using natural gas supplies to Europe as a weapon.
Josep Borrell, the EU’s high representative for foreign affairs and security policy, said the next six months would be crucial. He also pointed out that Europeans know they have a tough winter ahead.
Borrell explained that Europeans are reconsidering their dependence on Russian energy. As he said, the EU will take a hard line against the aggressive policies of Russia and its President Vladimir Putin.
The European official also said that if Europeans can overcome the crisis and remain united, the local military balance in Ukraine will be sustainable. By spring, Ukraine and the EU will be better strategically.
What Putin also did not expect, he said, was that Russia would reach this point six months after the war began. He also pointed out that Putin has lost the war morally and politically.
In this context, Reuters quoted a White House official as saying that Russia, which uses energy as a weapon, chose to stop the “Nord Stream 1” pipeline transmission business. He also said that U.S. sanctions on Russia did not prevent the pipeline from running.
The U.S. official said the U.S. was cooperating with Europe to ensure sufficient gas supplies, Reuters reported. He also said that as a result of these cooperative efforts, “Europe’s natural gas inventories will be able to fill up when the winter heating season arrives.”
The White House confirmed that U.S. President Joe Biden is committed to taking all necessary steps to increase energy supplies and reduce their prices. In addition, Biden has taken steps including working with allies and placing limits on Russian oil prices to maintain global oil supplies.
Iran is an alternative supplier
Iran, on the other hand, said it would be willing to supply energy to Europe if the U.S. lifted sanctions on it.
Iranian Foreign Ministry spokesman Nasser Kanani told a news conference: “The current crisis in Ukraine is causing Europe to face energy supply problems. Under this circumstance, if sanctions on Iran are lifted, then Iran can meet Europe’s energy needs.”
Iran is one of the world‘s top oil and gas exporters. The country’s proven natural gas reserves are second only to Russia. However, for this important material, Iran is generally limited to its two neighbors, Turkey and Iraq. At the same time, the oil industry needs to invest heavily in infrastructure, as well as increase production and export capacity.
Gazprom completely halted gas supply via the Baltic Sea pipeline to Germany. The company attributed the decision to the discovery of an oil leak from one of the turbines in the pipeline. In addition, the company was unable to perform maintenance on the equipment due to European sanctions.
On Friday, September 2, the finance ministers of the G7 (UK, Canada, France, Germany, Italy, Japan and the US) announced plans to impose price caps on Russian crude oil and its petroleum products. Hours after this announcement, Moscow suspended gas supply through Nord Stream 1 indefinitely.
In this regard, the British “Financial Times” quoted a document from the European Commission saying that for the import of natural gas from Russia, there must be a minimum limit that can be paid. The paper also said that capping gas prices would reduce the impact on electricity prices.
According to the document, the European Commission also said that setting a ceiling on Russian gas prices is a complex process that requires a lot of coordination.
Against the backdrop of the ongoing impact of the Russian-Ukrainian war on the global economy, the European energy crisis of 2022 coincides with a twin crisis of drought and a significant rise in global inflation in the Old Continent. This has also led to many difficulties for continental European countries to store the energy they need for the coming winter.