EU on track for nightmare energy ‘rationing’ ahead of cold winter
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As Putin’s invasion of Ukraine and skyrocketing bills stokes a full-blown energy crisis, operators have ramped up the capacity of British and Dutch pipelines. National Grid has applied to the Joint Office of Gas Transporters for permission to increase the pressure on the 235km pipeline between Bacton, Norfolk, and Balgzand, Netherlands. This would enable the pipeline to export 34percent more than normal.
The news comes after the chief executive of energy giant Shell warned energy could be rationed in the UK if the Kremlin rails against sanctions by cutting supplies. European demand for gas has contributed to the UK’s gas exports increasing 185 per cent from 2020 to 2021, reaching record levels of exports in April 2022.
This follows a request from BBL, the Netherlands-based operator of the pipeline, to maximise gas exports to “address existing gas supply shortages which are being experienced in continental Europe”, National Grid said.
The Grid added: “Enhanced resilience of supplies across Europe heading into the forthcoming winter can benefit the GB market by reducing likely demand for exports to Europe over the expected period of high demand from October 2022 as we move into the winter.”
Concerns that Russia may further cut supplies to Europe has prompted the continent to race to fill up gas storage sites.
Prior to the invasion, Russia supplied roughly 40 percent of Europe’s gas. However, since the invasion began the Kremlin has retaliated against sanctions by limiting fuel supplies, prompting some to accuse them of “weaponising” them.
The Nord Stream 1 pipeline to Germany was closed for ten days for maintenance. Some feared it would not be restarted, but flows resumed this week at only 40 percent capacity.
The knock-on effect of this caused energy giant Uniper to fail, prompting Olaf Scholz’s German government to rescue it with a £13bn bailout on Friday.
Crippled by high prices, dwindling supplies and left vulnerable as a Europe’s main exporter of Kremlin-backed Gazprom gas, Uniper requested a bailout weeks ago. The European Commission has called on member states to cut gas use by 15 percent to prevent having to ration energy.
French president Emmanuel Macron has warned citizens to prepare for street lights to be switched off to save energy if Russia turns off its gas taps. While the UK does only get less than 4 percent of its gas directly from Russia, it remains vulnerable to knock-on effects from Europe’s markets.
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It typically exports to Europe during summer and imports during winter, effectively making use of storage capacity on the continent.
In recent weeks Britain has been sending more than normal, effectively acting as a “bridge” to Europe for supplies of liquified natural gas shipped in from around the world.
Shell boss Ben van Beurden has predicted a “tough winter”.
Regulator Ofgem has already hiked its energy price cap this year and is on course to do so again in October.
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