Germany upbeat on energy security; Russia cuts gas to France

BERLIN: German Chancellor Olaf Scholz said on Tuesday that his country is well-prepared to tackle a possible energy shortage because of Russia's squeeze on European gas supplies, even as fears grow about the juggernaut of rising prices that will likely hit consumers across the continent this winter.

Scholz spoke at the start of a two-day government retreat, attended also by Spanish Prime Minister Pedro Sánchez, which will focus on the impacts of Russia's invasion of Ukraine on the energy supply in Europe.

Scholz cited Germany's decisions to reactivate oil and coal-fired power plants, mandate the filling of natural gas storage facilities, and lease floating liquefied natural gas terminals.

A decision on extending the operating life of Germany's three remaining nuclear power plants is also expected soon.

"All of this and many further measures have contributed to us being in a much better situation as far as supply security is concerned than could have been foreseen a couple of months ago," Scholz told reporters at the government's guest house in Meseberg, north of Berlin.

"We will be able to cope quite well with the threats that we face from Russia, which is using gas as part of its strategy in the war against Ukraine," Scholz noted that gas storage facilities are already over 80 percent full, more than they were at this time last year, and the government is expected to agree on a further package of measures in the coming days to help German consumers cope with steeply rising energy prices.

Russia's state-controlled energy company Gazprom further reduced gas deliveries to the French company Engie, raising fears that Moscow might cut off the gas completely as political leverage over the war in Ukraine.

Gazprom informed Engie of a reduction in gas deliveries, starting on Tuesday, because of "a disagreement between the parties on the application of several contracts," according to the statement from the French energy company.

Deliveries for Engie from Gazprom have significantly decreased since Russia invaded Ukraine on February 24, with a recent monthly supply of 1.5 TWh, which compares to Engie's total annual supplies in Europe above 400 TWh, the statement said.

Engie had already secured the volumes necessary to meet its commitments to its customers, the statement said, adding that it has also put in place measures to "significantly reduce any direct financial and physical impact" that could result from Gazprom's interruption in gas supplies.

Russia has cut off or reduced natural gas to a dozen of European Union countries. Since spring, EU leaders have been appealing to the public to use less gas over the summer to build storage in winter.

The bloc has proposed member states voluntarily cut their use by 15 percent. It's also seeking the power to impose mandatory cuts across the 27-nation bloc if there is a risk of severe gas shortage or very high demand.

France, like other European countries, is trying to beef up its gas reserves for winter and fill up its storage by early autumn to avert an economic and political crisis.

The French government rolled out an "energy sobriety" plan in June, targeting a 10 percent reduction in energy use by 2024.

Prime Minister Elisabeth Borne on Monday urged businesses to put in place energy-saving plans, warning that companies would be hit first should the government be forced into rationing gas and electricity because of severe shortages.

To wean themselves off Russian gas and reduce the climate impact of the energy sector, European countries have significantly ramped up efforts to build wind, solar and other renewable forms of energy production.

Baltic Sea nations were due to meet on Tuesday in Copenhagen, Denmark, to announce plans for a major increase in wind power production by 2030 as a way to free the region from overdependence on Russian natural gas.

Finland, Sweden, Estonia, Latvia, Lithuania, Poland, and Denmark aim to increase the capacity for offshore wind seven-fold in the Baltic Sea to just under 20 gigawatts from the current under 3 gigawatts, the Politiken newspaper wrote.

Up to 1,700 new offshore wind turbines would produce power equivalent to almost 20 nuclear power plants, providing enough electricity for 22-30 million households.

"The war in Ukraine and climate change are happening at the same time. We have two crises on the table. We have to speed up the green transition, and we have to free ourselves from Russian fossil energy," Danish Prime Minister Mette Frederiksen said in an interview with Politiken.

Her Estonian counterpart, Kaja Kallas, said in the same interview that "you have to be connected to friends who won't hit you in a crisis." The daily, which had obtained a draft of the plan, said the countries have committed to increasing energy cooperation in the form of strong development of offshore wind and, in the short term, import of liquefied gas.

The plan is expected to be formally presented later on Tuesday during a meeting of leaders from the Baltic countries and the European Union in Copenhagen.