Protecting the Populace by Amassing Abundant Reserves
Updated: Oct 10
According to Gas Infrastructure Europe, European gas storages are 86% full, with German reserves coming close to 90% capacity with a projected 95% storage reserve by November. These stockpiles are insufficient for a lengthy winter, and to exacerbate difficulties, this week Russian supplies began operating at drastically reduced levels prompting Germany to undertake contracts for liquefied natural gas with Gulf suppliers, while other European governments announced energy saving measures.
Now that the crucial Nord Stream 1 gas pipeline from Russia has been shut down, Germany intends to negotiate LNG contracts in the United Arab Emirates in order to supply the terminals it is constructing, and by purchasing LNG terminals to minimize its dependency on Russian gas. Four FSRUs, each capable of storing and re-gasifying 5 billion cubic meters per year of imported marine gas, were leased in May. In the winter of 2023/2024, Germany is anticipated to contract its fifth floating LNG plant.
During his recent visit to the United Arab Emirates, German vice chancellor Olaf Scholz is anticipated to sign contracts for more liquefied natural gas (LNG) as Germany strives to replace Russia by relying on alternative energy sources. Earlier in the year, Robert Habeck, German Economy Minister, stated in relation to his personal trips to Qatar and the UAE, that there has been a gradual expansion of the gas selection, and the government is in constant discussions with other nations. Habeck made his remarks in the northern German city of Lubmin, where the government expects a state-leased FSRU to be in operation by the end of next year. Prior to Chancellor Olaf Scholz's trip to the Gulf, RWE of Germany stated it is engaged in cordial and productive conversations with Qatar over LNG imports.
According to reports, the LNG negotiations between Germany and Qatar have been difficult due to disparities in contract conditions. Habeck noted that the nation must demonstrate it can plan, authorize, and construct quicker than is normal in Germany. The new FSRU vessels will be able to link to the German gas network by the beginning of the new year, according to his assessment. After touring a proposed LNG terminal in northern Germany, Habeck remarked that the country has a prospect of a decent winter if all goes according to plan, German reserves remain strong, and winter weather cooperates.
According to Russia, sanctions imposed by the West in retaliation for Moscow's invasion of Ukraine have impeded pipeline delivery. European lawmakers have described Russia's energy manipulation as a weapon against European nations and their citizens. Nearly 40% of the European Union's gas requirements are met by Russia; thus, the sharp decline in supply has prompted governments to explore other energy sources and allay worries of potential power outages and economic slowdown.
According to the director of France's energy regulator CRE, beginning around October 10, Germany will also be able to rely on French gas. This follows French President Emmanuel Macron’s announcement that the two countries will collaborate on energy supply. Spain, France, and other nations have also initiated contingency plans to avert power outages. Despite the cessation of Russian gas supplies to Europe via Nord Stream 1, exports via Ukraine have resumed but with a substantial drop.
Emmanuelle Wargon, the head of France's CRE, has warned that extraordinary measures, such as localized power cuts, may be used this winter if French power company EDF's race to fix its ageing nuclear reactors is delayed; nevertheless, families should not experience gas shortages. According to EDF, several contractors assisting it with monitoring and repairing its corroded nuclear reactors want to be excluded from its radiation exposure restrictions so that their staff may devote more time to the job. The firm, which is urgently preparing its nuclear power stations for the next winter, argued that the new level was compliant with its own standards and far lower than French legal requirements.
EDF argued, in support of the modification, that their joint venture partners had not accounted for the nuclear component of their locations and the increased number of hours worked as a result of current operations when determining the radiation limits. It is believed, but unconfirmed, that at least one EDF contractor, the French business Monteiro, has already increased the maximum amount to which its employees can be exposed, claiming there is no health risk involved. The adjustments to the safety advice demonstrated EDF's desire to restart the reactors that were shut down due to the discovery of stress corrosion at several places.
Prior to winter, France's nuclear fleet, the second biggest in the world after the United States, will go down for routine maintenance and fuel preservation. The unusual number of outages has worsened a continental energy gridlock and contributed to record-high electricity costs. This occurs at a time when Europe is striving to find gas sources other than Russia. Nuclear energy generation in France is at a 30-year low. EDF recently issued its sixth profit warning of the year, noting that it anticipates its core earnings to decrease by 29 billion euros in 2022 due to declining output.
Due to a maintenance schedule, France, which is generally Europe's largest electricity generator, is now importing power from its neighbors even before temperatures begin to plummet, an issue the firm attributes to a lack of skilled employees and radiation dangers. Last month, EDF CEO Jean-Bernard Levy stated that plant inspection and maintenance personnel must work in a high-radiation region of the reactor. Some experts believe EDF's timeline for restarting the 29 offline reactors is overly optimistic, but the company assures adherence to the schedule.
Elsewhere, Spain's Minister of Industry, Reyes Maroto, has recommended that energy-intensive businesses be obliged to close during winter consumption peaks. She told the Spanish news site Europa Press that such closures are unnecessary at this time and that the affected companies will get monetary compensation. In addition, Fingrid, Finland's national grid operator, has cautioned its citizens to be prepared for power interruptions. In a revised assessment released on Monday, the national grid operator Fingrid warned Finns to be prepared for power interruptions throughout the next winter due to a possible electrical deficit.
Since Swedish utility Vattenfall postponed the reopening of the Ringhals 4 nuclear reactor by two months, Finland's ability to import power from Sweden has declined, despite the country's need on imports to maintain a consistent supply further challenging the Nordic and Baltic areas' energy supply dependability. Vattenfall alerted the appropriate authorities that unplanned repairs were delaying the restart of the facility following its annual maintenance. This prolonged blackout has occurred at a crucial time, as energy costs rise throughout Europe and governments rush to assure sufficient power supply for the coming winter.
Due to the radioactive nature of the reactor's pressure vessel, Ringhals must develop a full-scale replica of the 12-meter-tall structure for training purposes before any repairs can be performed. According to the operator, Ringhals will use the mock-up to evaluate the processes, materials, and specialized equipment necessary to clean the pressure vessel and install the new parts. The Ringhals 4 outage might affect the rates in neighboring nations. According to Tor Reier Lilleholt, an expert on the electrical market at the Norwegian company Volue, the outage aggravates an already precarious power situation in southern Sweden. Ringhals 4 has an installed capacity of 1,130 MW, and Vattenfall has prolonged ongoing maintenance by three months due to the breakdown of a vital component during testing at the end of August. According to Pontus de Mare, Head of Power System Operations for national grid operator Svenska Kraftnat, import requirements would grow from 36 to 149 hours if Ringhals remained inactive over the winter. He emphasized that the current extension might result in price rises and power outages in southern Sweden owing to the inability to secure sufficient energy when demand is strong.
In the case of severe cold weather, Finland would also require electrical imports from Sweden, as it no longer imports electricity from Russia, which accounted for almost 10% of Finnish usage. The Finnish electrical firm Karhu Voima Oy has filed bankruptcy as a result of a significant rise in power rates, mirroring the disruptions that have happened throughout the continent. The German Minister of Economy has cautioned that Germany will not allow large gas importers such as VNG to fail, and a representative for the German economics ministry has stated that conversations are now underway with the financially troubled importer Uniper, but they cannot continue forever.
Additionally, the Portuguese government has publicly expressed its worries. Environment and energy minister Duarte Cordeiro emphasized that Portugal has a day-to-day problem, such as not getting the scheduled quantity of gas, but that Portugal is attempting to diversify its supplies to improve energy security. The country has requested that the European Commission continue preparations for a unified EU gas purchasing platform and establish import pricing.
If Nigeria fails to deliver all the gas it owes, there may be a shortage of liquefied natural gas (LNG) in Portugal this winter, that country's environment and energy minister said on Monday. When asked if there was a chance that Nigeria wouldn't achieve its LNG supply norms, Duarte Cordeiro replied that although the government had assured Lisbon that it would, there is a substantial risk that it would not due to the growing demand for gas from other sources. As a consequence of pipeline theft and vandalism in Nigeria, which has dramatically curtailed oil and gas production, the port at Bonny Island, which is controlled by the gas business Nigeria LNG Ltd, is only functioning at 60% capacity. NNPC Ltd, Shell, TotalEnergies, and Eni manage Nigeria LNG.
Even though Portugal's gas reserves are now at full capacity, Cordeiro warned that if Nigerian LNG supplies were to drop, the government would have to explore alternative sources. If other European nations followed suit, he foresaw a significant increase in the price of imported gasoline. The United States is the nation’s second-largest supplier. According to Cordeiro, Portugal is dedicated to diversifying its energy suppliers to enhance the nation's energy security, which includes steps to reduce gas use and raise the nation's already high renewable energy output.