Manufacturers Brace for Nord Stream Repairs, Fearing Pipeline Won’t Reopen

PARIS — European producers are preparing for possible natural gas rationing that would force them to halt production amid fears Russia will halt gas supplies through its main artery to Europe.

On Monday, the Nord Stream pipeline, which runs 760 miles from northwestern Russia under the Baltic Sea to Germany, will enter 10 days of annual maintenance, repairs that are routine in peaceful times. European officials say Moscow, which has already cut gas supplies to 40% of the pipeline’s capacity, may not bring it back online.

The Kremlin plans to continue delivering gas through the pipeline after maintenance work is complete, and that any disruptions are due to Western sanctions, which it says have blocked delivery of a turbine for the pipeline, which is being repaired in Canada. But European capitals say Moscow is weaponizing its gas supply, cutting back supplies from the pipeline over the past month in retaliation for its support of Ukraine.

Canada said on Saturday it would send the turbine to Germany after weeks of talks with the German government. Berlin wants to return it to Russia and says the move shows Moscow is using the turbine as a pretext for a political decision to cut gas supplies to Europe.

Europe has enough gas for now, but producers in the region are bracing for a winter without Russian supplies. Some, requiring production chemicals made with natural gas, are trying to import them from regions outside Europe where the fuel is plentiful. Others plan to switch from natural gas to other fuels wherever possible. And some producers fear they have no choice but to shut down completely.

“There are no easy fixes when we get into a cutback situation,” said Svein Tore Holsether, CEO of Yara International HOW

A, the world’s largest fertilizer manufacturer.

Europe counted on Russian gas to stock up for the winter when consumption peaks. Without Russian supplies, officials worry there could be shortages as temperatures drop. Since Russia invaded Ukraine in February, Europe has bought record amounts of liquefied natural gas from the US and other non-Russian exporters, but those supplies may not be enough to replace Russian gas, which consumed 40% of the European Union’s gas last year accounted for total supply of fuel.

Russian President Vladimir Putin on Friday warned the West not to impose further measures against Moscow.

A landing facility of the Nord Stream natural gas pipeline in Lubmin, Germany.


Photo:

HANNIBAL HANSCHKE/REUTERS

“Sanctions restrictions against Russia do much more damage to the very countries that impose them,” Putin said at a government meeting. “Continued application of sanctions policies could lead to even more serious, even catastrophic consequences in the global energy market.”

Uniper SE, one of Europe’s largest energy suppliers, requested a bailout from the German government on Friday after being hit hard by dwindling gas supplies from Russia. Uniper, Germany’s largest importer of Russian gas, had to make up the difference on the spot market and pay higher prices for this gas. Meanwhile, France plans to nationalize energy giant EDF SA,

which has lost billions of euros to an electricity price cap imposed by the government.

The continent’s energy-intensive industries are discussing with governments whether they can reduce gas use to reserve scarce supplies for households when winter arrives.

Yara, which has 15 production sites across Europe, uses natural gas to produce ammonia, the main ingredient in nitrogen fertilizer. Yara ran its ammonia operations at near-full production for the first week of July, but Mr Holsether said the company could shut down and import ammonia from its other sites in markets around the world where natural gas is plentiful. The company made the move several times over the past year when confronted with spikes in European natural gas prices. There are limits to the company’s flexibility, said Holsether.

“Ammonia producing plants are not really designed to be ramped up and shut down as prices fluctuate,” he said.

German manufacturers, the engine of European industry, are rushing to prepare for a possible Russian shutdown.

Hamburg Aurubis Inc

, one of the largest copper producers in Europe, wanted to replace gas with electricity and oil. However, gas remains the primary fuel for many of its processes and cannot be substituted in the short term, including for some of the work at the Hamburger Hütte, where more than 2,000 workers produce wires, cathodes and precious metals.

The shift to alternative energy sources has been further complicated by global supply chain disruptions. Aurubis estimates that the postponement could take up to a year.

The German company Ritzenhoff AG is active in one of the most energy-intensive industries in the world: glass production. Most of the energy used in glassmaking comes from burning natural gas, which is used to heat furnaces to melt raw materials and form glass. The gas keeps what Axel Drösser, the CEO, calls “glass soup” boiling in tanks at over 2,700 degrees Fahrenheit.

SHARE YOUR THOUGHTS

Do you think the EU is ready for energy independence? Why or why not? Join the conversation below.

“Natural gas cannot be substituted here. If there is no gas, the furnaces have to be shut down and production stops,” he said. In the event of a production standstill, the tanks could be damaged if left idling.

Mr Drösser said the company, which sells its goods in more than 100 countries, has tried to reduce its gas consumption, including by using some hydrogen. “However, an ad hoc substitution of gas in glass production is not possible with the given infrastructure,” he said.

With a view to a winter without Russian gas, Ritzenhoff has developed two scenarios: a “standby mode” in which production stops but a minimum amount of glass is still kept liquid to protect the tanks, and a complete standstill.

Coatinc Company Holding GmbH, one of Germany’s oldest family businesses with over 500 years of history, provides a vital service to many industries that use steel: galvanizing, or immersing the steel in molten zinc in huge kettles to prevent corrosion. To melt the zinc, it relies 90% on gas.

While Coatinc would like to switch to electricity in the longer term, this would take a few years and require an investment of around 16 million euros, the equivalent of 16.4 million US dollars.

As Europe struggles to wean itself off Russian energy, American natural gas producers are struggling to meet demand and prices are rising. Factors such as extreme weather and equipment needs created a shortage during the war in Ukraine. Illustration: Laura Kammermann and Sharon Shi

But if the gas goes out this winter, the company’s production will also end. In this case, managing director Paul Niederstein is hoping for a two-week lead time so that the company can pump around 7,000 tons of liquid zinc from the boilers, cool them down and store them.

Mr Niederstein said he was currently trying to convince the German authorities, who would decide who gets petrol if rationing were to take place, that his industry was critical and should be given priority.

“Galvanized steel is used to build solar arrays and other renewable energy infrastructure,” he said. “We don’t make chocolate here.”

Some companies that wanted to use gas instead of oil or coal as part of plans to reduce carbon emissions are now backtracking because of looming gas shortages.

Volkswagen Inc

operates two coal-fired power plants at its headquarters in Wolfsburg, which supply the plant and the city with electricity and heat. In 2018, VW announced it would invest 400 million euros in switching to gas, saving 1.5 million tons of CO2 emissions per year.

The transition should be completed by the end of this year. But after Russia’s invasion of Ukraine and the subsequent gas supply crisis, VW CEO Herbert Diess said the company could extend its use of coal.

write to Matthew Dalton at Matthew.Dalton@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

https://www.wsj.com/articles/companies-brace-for-nord-stream-repairs-fearing-pipeline-wont-reopen-11657450800 Manufacturers Brace for Nord Stream Repairs, Fearing Pipeline Won’t Reopen

Alley Einstein

USTimesPost.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@ustimespost.com. The content will be deleted within 24 hours.

Related Articles

Back to top button