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EU Looks to Gas Demand Cuts to Weather Winter

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The EU is racing to cut its gas demand to avoid a winter crunch and realizes the quickest path is to free up the molecules it already has to store underground. The 27-member bloc passed a new plan to reduce gas use in Europe by 15% until spring 2023. The latest move signals a recognition that after all the frantic gas diplomacy following Russia’s invasion of Ukraine, the push to diversify away from Russian piped gas by two-thirds this year ultimately has its limits. Cutting demand is now the mantra as Russia this week reduced flows via Nord Stream, Europe’s largest gas pipeline, to 33 million cubic meters, or 20%, of the pipe’s capacity from a previous 40%. This sent European gas prices soaring to their highest levels since March. The EU’s “Save Gas for a Safe Winter” plan has its critics, who say exemptions for some countries and gas-hungry industries undercut its aims. But if the EU can maintain consensus, the plan could save up to 45 billion cubic meters from August to March. Russia’s Gazprom said on Jul. 25 that flows via Nord Stream would plummet because of turbine maintenance issues. In reaction, the front-month (August) Dutch TTF gas futures contract surged the following day to €227.5 per megawatt hour (about $68/MMBtu) and has hovered above €200. EU officials say they hope to dampen the massive swings in prices driven by Moscow but privately admit to Energy Intelligence that there is little hope of returning to the price levels seen before the war. “We need to get rid of the Russian blackmail just to calm the markets,” says one diplomat.

Topics:
Gas Demand, Gas Prices, Supply & Demand , Ukraine Crisis
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