By Kim Mackrael and Joe Wallace
European countries on Tuesday reached a watered-down agreement to curb their consumption of natural gas over the next eight months in an effort to shield their economies from a possible cutoff of Russian supplies.
The deal calls for countries to voluntarily reduce their gas use by 15% beginning next month, matching the level proposed by the European Union’s executive arm last week, and says the target could become mandatory in an emergency. But it contains significant carve-outs for countries with limited connections to other European gas networks and those whose electricity grids aren’t linked to the European system.
The agreement came a day before exports of natural gas through the Nord Stream pipeline to Germany by Russian state-owned producer Gazprom PJSC are due to fall to about one-fifth of the pipeline’s capacity.
The fresh reduction means Europe faces an even taller order in racing to fill storage sites close to the brim by winter, when gas supplies will start to be drained as colder temperatures boost demand.
Rocketing gas prices have already sent inflation to record highs in the eurozone and ricocheted through the region’s financial markets. They jumped again Tuesday, rising 11% in the wholesale market to almost 200 euros, or $203, a megawatt-hour.
Unnerving traders, Russia indicated that there could be continuing interruptions to supply. Kremlin spokesman Dmitry Peskov said Moscow hopes turbine issues that Russia has blamed for the reduction in Nord Stream exports would be resolved. But he added: “The situation is critically complicated by the restrictions and sanctions that have been introduced against our country.”
European officials and companies have rejected Gazprom’s explanation for the drop in flows as cover for weaponizing energy supplies.