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World Gas prices soar as Russia cuts German supply

08:41  28 july  2022
08:41  28 july  2022 Source:   bbc.com

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Gas prices have soared after Russia further cut gas supplies to Germany and other central European countries after threatening to earlier this week.

  Gas prices soar as Russia cuts German supply © Reuters

European gas prices rose 9%, trading close to its earlier all-time high after Russia invaded Ukraine.

Critics accuse the Russian government of using gas as a political weapon.

Russia has been cutting flows through the Nord Stream 1 pipeline to Germany, with it now operating at less than a fifth of its normal capacity.

Germany imports 55% of its gas from Russia and most of it comes through Nord Stream 1 - with the rest coming from land-based pipelines.

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Russian energy firm Gazprom has sought to justify the latest cut by saying it was needed to allow maintenance work on a turbine.

The German government, however, said there was no technical reason for it to limit the supply.

Ukraine has accused Moscow of waging a "gas war" against Europe and cutting supplies to inflict "terror" on people.

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The latest reduction in flows puts pressure on EU countries to reduce their dependence on Russian gas even further, and will likely make it more difficult for them to replenish their gas supplies ahead of winter.

Since the invasion of Ukraine European leaders have held talks over how to reduce its dependence on Russian fossil fuels.

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  Gas prices soar as Russia cuts German supply © BBC

On Tuesday, the European Union agreed to cut gas use in case Russia halts supplies but some countries will have exemptions to avoid rationing.

EU members have now agreed to voluntarily reduce 15% of gas use between August and March.

However, the deal was watered down after previously not having exemptions.

The EU has said its aim from the deal is to make savings and store gas ahead of winter, warning that Russia is "continuously using energy supplies as a weapon".

The voluntary agreement would become mandatory if supplies reach crisis levels.

The EU agreed in May to ban all Russian oil imports which come in by sea by the end of this year, but a deal over gas bans has taken longer.

Since Russia invaded Ukraine in February the price of wholesale gas has already soared, with a knock-on impact on consumer energy bills across the globe.

The Kremlin blames the price hike on Western sanctions, insisting it is a reliable energy partner and not responsible for the recent disruption to gas supplies.

While the UK would not be directly impacted by gas supply disruption, as it imports less than 5% of its gas from Russia, it would be affected by prices rising in the global markets as demand in Europe increases.

UK gas prices rose 7% on Wednesday, almost six times higher than a year ago, but still 20% below the peak seen in the aftermath of Russia's invasion of Ukraine.

UK energy bills increased by an unprecedented £700 in April, and are expected to rise again to £3,244 a year for a typical household in October.

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