WORLD
Russia told to pump more gas to European market as winter supply crunch looms

The world’s leading energy authority has issued a rare public rebuke to Russia over a crunch in gas supplies as fears grow that Moscow is stoking a winter energy crisis across Europe.

Russia “could do more” to increase gas supplies to the Continent and show it is a “reliable supplier”, the International Energy Agency (IEA) said.

It came as Spanish officials warned the European Union that rocketing fuel bills risk turning the public against green power, and Boris Johnson was forced to deny there could be blackouts this Christmas.

The IEA, which was set up to respond to disruption in oil supplies in the wake of the 1973 oil crisis, said that the European gas market “could well face further stress tests from unplanned outages and sharp cold spells” after gas prices surged to as much as five times their level a year ago.

Analysts at the agency, whose members are made up of rich Western countries including  the UK, said that, based on the information available, Russia was “fulfilling its long-term contracts with European counterparts” but exports to Europe are lower than they were in 2019.

It added: “The IEA believes that Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season.

“This is also an opportunity for Russia to underscore its credentials as a reliable supplier to the European market.”

Politicians and analysts have become increasingly concerned that Russia is holding back on gas supply to put pressure on Germany to approve the start-up of a new gas pipeline, Nord Stream 2.  On Friday night, more than 40 MEPs signed a letter accusing Russia’s state gas giant Gazprom of “deliberate market manipulation”. It has denied the allegation.

Europe sourced more than 40pc of its natural gas from Russia in 2019, using the fuel to heat and power homes and run industrial processes across the region.

The Continent and Britain are both now battling soaring wholesale gas and electricity prices amid a global gas supply crunch, forcing businesses to curb output and piling pressure on household bills.

Several British energy companies stopped accepting new customers after their finances came under massive strain. Ministers also struck a deal to restart production of carbon dioxide factories which closed last week because of soaring prices, putting food supplies at risk.

Speaking to reporters while on a visit to the US, Mr Johnson sought to downplay fears of a serious shortfall in energy supply.

Insisting that Christmas “is on”, he said: “I’m confident we can keep energy supplies going. This is a short term problem.”

On Tuesday,  natural gas in Britain ended the day at 186.1p per therm – slightly down on record of 189.6p per therm on Monday but still more than five times higher than prices last September of around 30p per therm.

British electricity prices were at £160.13 per megawatt hour – more than three times their average over the past decade. German and Spanish power prices have also been three or four times higher than in 2019 and 2020.

The immediate impact in Britain has been a threat to supplies of carbon dioxide used in the meat industry, food packaging and other key areas, with industry warning of a knock-on risk to food supply.

Last night, ministers intervened to agree financial support for US-listed CF Industries so it can re-open two UK fertiliser plants which supply about 60pc of the UK’s CO2 as a by-product. The company shut down the sites last week in the face of rising natural gas prices.

The Government is considering financial support for energy companies which take on customers from failed suppliers, amid concerns that dozens could collapse in coming weeks. Three small UK energy businesses stopped accepting new customers on Tuesday, Bloomberg reported.

The Spanish Government, meanwhile, warned the European Commission on Tuesday, that it needed to develop procedures to help protect consumers, adding that public backing for the push to low carbon energy might “not stand a sustained period of abusive electricity prices”.

The IEA said European gas prices reflected global supply and demand dynamics, caused by factors such as cold spells in the US and droughts in Brazil, with some key gas fields out for maintenance.

Calm weather means wind turbines’ output has also been low, adding to demand for gas for power generation.

Britain gets about half of its gas from the North Sea, a third from Norway and the rest via pipes from the Continent or shipments from Russia, the US and elsewhere. British gas prices are closely tied to the Continent’s, given the markets are connected.

Fatih Birol, executive director of the IEA, added: “Today’s situation is a reminder to governments, especially as we seek to accelerate clean energy transitions, of the importance of secure and affordable energy supplies – particularly for the most vulnerable people in our societies.

“Well-managed clean energy transitions are a solution to the issues that we are seeing in gas and electricity markets today – not the cause of them.”

Source: Telegraph.co.uk

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