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EU to urge member states to cut gas consumption ‘immediately’

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Brussels is poised to order EU members to “immediately” cut gas consumption, warning that without enhanced conservation, the continent faces fuel shortages this winter as Russia restricts supplies.

The European Commission will provide members with voluntary targets for gas cuts next week, according to a draft document leaked by the Financial Times that warns the targets will become mandatory in the event of a severe supply disruption.

“Joint action now will be less disruptive and costly, promoting solidarity and avoiding the need for unplanned and uncoordinated action later in a possible gas depletion crisis,” the document says.

The move comes after the International Energy Agency warned that efforts to diversify away from Russian gas were no longer enough and that Europe was in danger of energy rationing unless demand was capped to allow storage to fill before winter.

Over the past month, Russia has reduced the capacity of the main pipeline to Germany, and the IEA fears further cuts cannot be ruled out. Fatih Birol, chief executive of the IEA, said Europe was facing a “red alert” and that “significant additional cutbacks” were needed to “prepare Europe for the harsh winter ahead.”

Ursula von der Leyen, President of the European Commission, on Monday signed a supply agreement with Azerbaijan that will increase supplies to Europe by 48 percent this year and aims to double them by 2025, although Azerbaijani imports make up only a small part of total supplies in EU.

The Central Asian country is one of several countries, including Qatar, the US, Israel and Nigeria, that the EU is courting in an attempt to find an alternative to Russian supplies.

Italy is also on the cusp of boosting supplies from Algeria, with Italian energy firm Eni and France’s TotalEnergies and Occidental set to sign an agreement on Tuesday with Algeria’s Sonatrach for a new $4 billion gas development project that will eventually secure new supplies.

But the IEA, which acts as the West’s energy watchdog, said on Monday that efforts to increase supplies have still failed and the EU needs stronger measures, including limiting demand for air conditioning and auctioning gas to industry.

The commission’s draft document did not include exact figures, but they are expected to be finalized before the final publication of the proposal on Wednesday.

The latest documents are a revised plan, leaked last week, that recommends limiting central heating and cooling in buildings and exempting coal-fired power plants from emissions reduction targets.

Diplomats and EU officials are negotiating potential targets and how they will be implemented, given the different energy balances of different member states.

One EU official said negotiations were ongoing over what sanctions could be applied if the targets become mandatory and are not met.

Europe used to rely on Russia for about 40 percent of its gas, but since Russia’s invasion of Ukraine, those supplies have become increasingly weaponized by Moscow in response to Kyiv’s support for the EU.

Russia has already cut off supplies to the Baltic countries, Finland, Poland and Bulgaria and reduced flows to Germany and Italy.

In the draft plans, the commission noted that in June gas flows from Russia to the EU fell to less than 30% of the average for the period from 2016 to 2021. In total, in 2021, Europe imported 155 billion cubic meters from Russia. about 400 billion cubic meters of gas per year on average.

The leaked gas plan warned that continued cuts in Russian gas supplies could lead to a 1.5% drop in EU GDP, depending on the extent of the breaches. The European Commission declined to comment.

Von der Leyen said in a speech in Baku that the EU should “diversify its activities away from Russia and turn towards more reliable, trustworthy suppliers”, and called Azerbaijan “an important energy partner”.

According to the memorandum, supplies from Azerbaijan should increase to 12 bcm this year, up from 8.1 bcm in 2021, and eventually reach “at least” 20 bcm by 2027. Fuel will be supplied to the EU through the Southern Gas Corridor pipeline, a joint project between Brussels and Baku, which was opened in 2018 and is mainly supplied from gas fields in the Caspian Sea.

But despite EU efforts to organize a joint purchase of gas similar to the coordinated purchase of Covid vaccines, officials have acknowledged that it competes in a tough market where countries already have long-term contracts.

Additional coverage by Peggy Hollinger in London and Amy Kazmin in Rome

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