PARIS— Fearing that Russia will stop supplying gas through its main route to Europe, European manufacturers are preparing for potential natural gas rationing that could force them to shut down production.
The Nord Stream pipeline, which travels 760 miles from northwest Russia under the Baltic Sea to Germany, will enter annual maintenance on Monday and remain there for 10 days. These repairs are customary during quiet periods. Moscow, which has already reduced gas deliveries to 40% of the pipeline’s capacity, may not restart it, according to European officials.
The Kremlin claims that once the maintenance is finished, it intends to continue supplying gas through the pipeline and that any interruptions are the result of Western sanctions, which it claims have prevented the delivery of a turbine for the pipeline that is being repaired in Canada. However, European capitals claim that Moscow is using its gas supply as a weapon and cut off deliveries through the pipeline last month as payback for their support for Ukraine.
After weeks of negotiations with the German government, Canada announced on Saturday that it would send the turbine to Germany. Berlin wants to give it back to Russia, arguing that doing so would demonstrate how Moscow has been using the turbine as an alibi to obstruct gas supplies to Europe on a political level.
For the time being, Europe has enough gas, but the manufacturers in the area are preparing for a winter without Russian supplies. Some people are looking to import chemicals from non-European nations where natural gas is more readily available because they need them for production that uses the fuel. Where possible, others intend to switch from natural gas to other fuels. Additionally, some producers worry that they would be forced to shut down entirely.
In the event of a curtailment, there are no simple fixes, according to Svein Tore Holsether, CEO of Yara International AS A, the largest fertilizer manufacturer in the world.
In order to stock up on gas for the winter, when consumption is at its peak, Europe was relying on Russia. Government officials worry that shortages might develop as temperatures drop without Russian shipments. Since Russia’s invasion of Ukraine in February, Europe has purchased unprecedented volumes of liquefied natural gas from the United States and other non-Russian exporters. However, those deliveries might not be sufficient to replace Russian gas, which made up 40% of the European Union’s total fuel supply last year.
Vladimir Putin, the president of Russia, issued a warning to the West on Friday against taking additional action against Moscow.
At a government meeting, Mr. Putin stated that countries that impose sanctions restrictions against Russia suffer much greater harm. “Further implementation of the sanctions policy could have catastrophic effects on the global energy market,” the report warned.
Uniper
One of the biggest utilities in Europe, SE, made a bailout request to the German government on Friday after being severely impacted by declining Russian gas supplies. The largest importer of Russian gas into Germany, Uniper, has had to make up the difference by purchasing that gas at a higher price on the spot market. Meanwhile, France is taking steps to nationalize energy giant
EDF SA, which has been losing billions of euros as a result of an electricity price cap imposed by the government.
Governments and the continent’s energy-intensive industries are debating whether gas consumption can be lowered to store limited supplies for households during the coming winter.
Natural gas is used by Yara, a company with 15 production facilities spread across Europe, to create ammonia, a crucial component of nitrogen fertilizer. Yara was operating its ammonia operations at close to full production in the first week of July, but Mr. Holsether claimed the company could ramp down and import ammonia from its other sites in regions where natural gas is more accessible. The company has done that several times in the past year in response to increases in the price of natural gas in Europe. The company’s flexibility has limits, according to Mr. Holsether.
According to him, ammonia-producing assets aren’t really made to ramp up and down in response to changing prices.
The engine of European industry, German manufacturers, are working quickly to get ready for a potential Russian cutoff.
One of Europe’s largest copper producers, Aurubis AG, based in Hamburg, stated it was looking to switch from gas to electricity and oil. However, gas continues to be the primary fuel for a number of its processes and cannot be replaced in the near future. This includes some of the work at its Hamburg smelter, where more than 2,000 employees produce wires, cathodes, and precious metals.
The disruptions to the world’s supply chains have made switching to alternative energy sources even more difficult. According to Aurubis, the transition could take up to a year.
Glass manufacturing is one of the most energy-intensive industries in the world, according to Ritzenhoff AG of Germany. Natural gas combustion, used to heat furnaces to melt raw materials and create glass, accounts for the majority of the energy used in the production of glass. The gas maintains a “glass soup” that the company’s CEO, Axel Drösser, refers to as boiling in tanks at a temperature of over 2,700 degrees Fahrenheit.
“Natural gas cannot be used in this situation. The ovens must be turned off and production stops if there is no gas, he explained. Tanks that are left idle after production stops risk being harmed.
In addition to using some hydrogen, Mr. Drösser claimed that the company, which sells its goods in more than 100 nations, has been attempting to reduce its gas consumption. But with the current infrastructure, he continued, “an ad hoc substitution of gas in glass production is not possible.”
Ritzenhoff has created two scenarios for a winter without Russian gas: a “holding operation,” where production stops but a small amount of glass is kept liquid to preserve the tanks, and a total shutdown.
With over 500 years of history, The Coatinc Company Holding GmbH, one of Germany’s oldest family-run businesses, offers a vital service for many industries that use steel: galvanizing, or submerging the steel in molten zinc in sizable kettles to ward off corrosion. Gas is required to melt zinc in a 90 percent efficient manner.
Coatinc wants to switch to electricity in the long run, but it would take some time and require an investment of about 16 million euros, or $16.4 million.
However, if the gas runs out this winter, so will the business’s output. The company would then be able to pump out roughly 7,000 tons of liquid zinc from the kettles, cool it down, and store it if Paul Niederstein, the executive manager, had two weeks’ notice.
In the event of gas rationing, the German government would decide who would receive gas, according to Mr. Niederstein, and he said he is currently attempting to convince them that his industry is essential and should be given priority.
Solar fields and other renewable energy infrastructure are built with galvanized steel, he claimed. “This is not a chocolate factory.”
Due to the impending gas shortage, some businesses that had planned to use gas instead of oil or coal as part of plans to reduce carbon dioxide emissions are now changing their minds.
AG Volkswagen at its headquarters in Wolfsburg, Germany, runs two coal-fired power plants that supply heat and electricity to the plant and the city. VW announced in 2018 that it would spend €400 million to switch to gas, reducing CO2 emissions by 1.5 million metric tons annually.
By the year’s end, the shift was supposed to be finished. However, VW CEO Herbert Diess stated that the company could continue using coal following Russia’s invasion of Ukraine and the ensuing gas supply crisis.
