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EU asks member states to ration energy as Putin tightens controls on gas supplies

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Ursula von der Leyen, President of the European Commission, said it is likely that Russia will cut off gas supplies to Europe.

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European countries are being asked to cut their natural gas consumption by at least 15% until next spring as part of a broader plan to combat cuts in supplies from Russia.

The European Commission, the EU’s executive arm, on Wednesday presented a plan for how countries can prepare for the winter season when their energy needs are much higher.

The plan comes as Russian energy giant Gazprom says it can’t honor gas contracts with the bloc, a major headache for European countries given how dependent they were on Russian energy before the invasion of Ukraine.

“Russia is blackmailing us. Russia uses energy as a weapon. And therefore, in any case, whether it is a partial or complete cessation of Russian gas supplies, Europe must be ready,” said the President of the European Commission. This was announced by Ursula von der Leyen at a press conference on Wednesday.

The plan proposes to the 27 EU countries to reduce gas consumption by 15% between August 1, 2022 and March 31, 2023. To do this, the governments of the 27 EU countries will have to update their national contingency plans and report to the Commission. every two months on how they are progressing towards their goals.

The Commission will be able to make this target, which is currently voluntary, mandatory for all EU countries in the event of a serious gas shortage.

So far, 12 Member States have been affected by the reduction in gas supplies, and a couple more have been completely cut off from supplies from Russia.

Von der Leyen said it was a “likely scenario” where Russia cuts off supplies to the bloc entirely. As a result, she added that any disruption would have repercussions for all countries, regardless of their energy needs. Therefore, “it is important that all member states contribute to saving, storing and being ready to share gas” with EU countries that may need it.

The European Union was preparing for a possible complete cessation of gas supplies from Russia after Moscow’s onslaught on Ukraine. However, alert levels appear to be on the rise as fears grow that Russia will indeed significantly reduce flows to Europe, or even stop them altogether.

The Nord Stream 1 pipeline, a key transit point for Russian gas to Europe, was closed for maintenance until July 21. However, many European officials are skeptical that flows will resume at full capacity.

Gazprom, the Russian energy giant, said on Monday it could not fulfill gas contracts with Europe due to unforeseen circumstances. German energy company Uniper rejected Gazprom’s argument.

This latest development added to previous fears that Russia is close to cutting off gas supplies to Europe entirely after flows already fell by 60% last month.

“Russia is intensifying its commodity war against Europe by freezing gas supplies via Nord Stream 1,” Velina Chakarova, director of the Austrian think tank AIES, told CNBC.

She added that the move by Russia “should be seen as a harbinger of a total gas embargo ahead of the winter season, as European storage facilities are underfilled and European governments heavily dependent on Russian gas supplies are under enormous economic pressure.”

European economies are already facing a bleak economic outlook, with inflation at record levels and persistent slowdowns. Much of this economic reality is caused by the energy crisis, greatly exacerbated by Russia’s war in Ukraine.

The upcoming winterization plan has emerged as the Commission is also stepping up gas deals with other parts of the world. On Monday, a new agreement with Azerbaijan was announced, and earlier deals were signed with the US.

European Energy Commissioner Kadri Simson said in June that gas fill rates had exceeded 56%, but some member states needed to make more progress in the coming weeks to boost their capacity levels. Back in March, the commissioner demanded a minimum storage target of 80% by November 1st.

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