On Monday, the Nord Stream pipeline, which runs 760 miles from northwestern Russia under the Baltic Sea to Germany, will undergo 10 days of annual maintenance, repairs that are routine in peacetime. European officials say Moscow, which has already cut gas deliveries to 40 percent of the pipeline’s capacity, may not bring it back online. The Kremlin says it plans to continue supplying gas through the pipeline once maintenance is completed and blames any disruptions on Western sanctions that it says have prevented a turbine for the pipeline being repaired being delivered to Canada. European capitals, however, say Moscow is using the gas supply as a weapon, cutting pipeline deliveries last month in retaliation for their support for Ukraine.
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A personal, guided tour of the best saddles and stories every day in The Wall Street Journal. Canada announced Saturday it would send the turbine to Germany after weeks of talks with the German government. Berlin wants it returned to Russia, saying the move would show Moscow is using the turbine as justification for a political decision to cut gas supplies to Europe. Europe has plenty of natural gas for now, but the region’s producers are bracing for a winter without Russian supplies. Some, who need chemicals for production made with natural gas, try to import them from areas outside Europe where the fuel is more abundant. Others plan to switch from natural gas to other fuels where they can. And some producers fear they would have no choice but to shut down altogether. “There are no easy solutions if we find ourselves in a constrained situation,” said Svein Tore Holsether, chief executive of Yara International AS A, the world’s largest fertilizer producer. Europe relied on Russian natural gas to supply itself in the winter when consumption peaks. Without Russian deliveries, officials fear shortages could emerge as temperatures drop. Since Russia invaded Ukraine in February, Europe has been buying record amounts of liquefied natural gas from the U.S. and other non-Russian exporters, but those deliveries may not be enough to replace Russian gas, which last year accounted for 40 % of the European Union. total fuel supply. Russian President Vladimir Putin warned the West on Friday not to impose further measures against Moscow.
Nord Stream gas pipeline disposal facility in Lubmin, Germany.
Photo: HANNIBAL HANSCHKE/REUTERS
“The restrictions on sanctions against Russia are doing far more damage to the very countries that impose them,” Mr Putin told a cabinet meeting. “Further use of the sanctions policy could lead to even more serious, even catastrophic, consequences for the global energy market.” Uniper SE, one of Europe’s biggest utilities, asked for a bailout from the German government on Friday after being hit hard by a cut in gas supplies from Russia. Uniper, which is Germany’s biggest importer of Russian gas, had to make up the difference in the spot market by paying higher prices for that gas. France, meanwhile, is moving to nationalize energy giant EDF SA, which has lost billions of euros under a government-imposed cap on electricity prices. The continent’s energy-intensive industries are discussing with governments whether they can cut gas consumption to preserve scarce supplies for households when winter arrives. Yara, which has 15 production facilities across Europe, uses natural gas to produce ammonia, the key ingredient for nitrogen fertilizers. Yara in the first week of July was running its ammonia operations at near full production, but Mr Holsether said the company could ramp up and import ammonia from its other facilities to markets around the world where natural gas is more abundant. . The company has taken this step several times over the past year when faced with spikes in gas prices in Europe. There are limits to the company’s flexibility, Mr. Holsether said. “Ammonia-producing assets are not really designed to continuously increase with price fluctuations,” he said. German manufacturers, the engine of European industry, are rushing to prepare for a possible Russian takeover. Hamburg-based Aurubis AG, one of Europe’s biggest copper producers, said it is trying to replace natural gas with electricity and oil. Gas, however, remains the primary fuel for many of its processes and cannot be replaced in the near term, including some work at its Hamburg smelter, where more than 2,000 workers produce wires, cathodes and precious metals. The transition to alternative energy sources has been further complicated by global supply chain disruptions. Aurubis estimates the shift could take up to a year. The German company Ritzenhoff AG operates in one of the most energy-intensive industries in the world: glass manufacturing. Most of the energy used in glass manufacturing comes from burning natural gas used to heat furnaces to melt the raw materials and form the glass. The gas keeps what Axel Drösser, the chief executive, describes as a “glassy soup” that boils in tanks at over 2,700 degrees Fahrenheit.
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Do you think the EU is ready for energy independence? Why or why not? Join the discussion below. “Natural gas cannot be replaced here. If there is no gas, the furnaces must be turned off and production must stop,” he said. In the event of a production shutdown, the tanks could be damaged if left idle. Mr. Drösser said the company, which sells its products in more than 100 countries, is trying to reduce natural gas consumption, including the use of hydrogen. “However, an ad hoc substitution of gas in glass production is not possible with the given infrastructure,” he said. Looking at a winter without Russian gas, Ritzenhoff has developed two scenarios: a “containment operation,” where production stops but a minimal amount of glass is still kept in liquid form to maintain tanks, and a complete shutdown. Coatinc Company Holding GmbH, one of Germany’s oldest family businesses over 500 years old, provides a critical service for many steel-using industries: galvanizing, or dipping the steel in molten zinc in huge vats, to prevent corrosion. For zinc to melt, it depends 90% on gas. While Coatinc wants to switch to electricity in the longer term, it will take a few years and an investment of about 16 million euros, which equates to $16.4 million. As Europe struggles to wean itself off Russian energy, US natural gas producers are struggling to meet demand and prices are rising. Factors including extreme weather and equipment needs have created a bottleneck amid the war in Ukraine. Illustration: Laura Kammermann and Sharon Shi But if the natural gas stops this winter, so will the company’s production. In that case, Paul Niederstein, the executive director, hopes to have two weeks’ notice so the company can draw about 7,000 tons of liquid zinc from the kettles, cool it and store it. Mr Niederstein said he is currently trying to convince German authorities, who will decide who gets gas in the event of a rationing, that his sector is critical and should be given priority. “Galvanized steel is used to build solar arrays and other renewable energy infrastructure,” he said. “We don’t make chocolate here.” Some companies that had planned to use natural gas instead of oil or coal as part of plans to reduce carbon dioxide emissions are now backing out because of the looming gas shortage. Volkswagen AG operates two coal-fired power plants at its headquarters in Wolfsburg, Germany, which provide heat and electricity for the plant and the city. In 2018, VW said it would invest 400 million euros to switch to natural gas, saving 1.5 million metric tons a year in CO2 emissions. The turnaround was expected to be completed by the end of this year. But after Russia’s invasion of Ukraine and the resulting gas supply crisis, VW CEO Herbert Diess said the company could extend its use of coal. Write to Matthew Dalton at [email protected] and Georgi Kantchev at [email protected] Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
