We walked through the colonies: France found how to plug the gas “hole”

MOSCOW, August 31 — PRIME, Oleg Krivoshapov. The French Engie reported that Gazprom had notified it of its intention to reduce gas supplies, which had already been significantly reduced before. The Western media, as expected, criticize the Russian exporter, and the French authorities admit that they cannot quickly replace the dropped volumes. “Prime” tried to understand the causes and possible consequences of what is happening.

WILL THE BISTRO BE CLOSED?

Gazprom, according to Western media, citing the French energy company Engie, notified it of a reduction in supplies due to disagreements over the application of bilateral contracts. According to this information, the Russian exporter of natural gas intends to reduce pumping from August 30.

At the same time, Engie assured that it had taken the necessary measures to “significantly weaken any financial and physical consequences” of the step taken by Gazprom. In particular, the company stated that it had accumulated enough energy to fulfill its obligations to customers and take into account its own needs.

The volumes of Gazprom in the structure of purchases of the French company in 2021, according to analysts from Morningstar, cited by Reuters, accounted for 11.47 billion cubic meters. And this is about 17% of total gas consumption in France last year, the agency points out. However, Gazprom’s deliveries were already decreasing this summer, the French Figaro specified. Now they correspond to only 1.5 terawatt-hours, Reuters specifies with reference to Engie.

ALGERIA, LNG AND NPP

The day before, on August 29, Engie confirmed that it was negotiating with the Algerian oil and gas company Sonatrach to increase the supply of “blue fuel” to France.

However, gas from Algeria will not be able to change the situation, French President Emmanuel Macron said on August 26 during his visit to the North African country. He noted that his share in supplies to France is 8-9%.

In turn, French Prime Minister Elisabeth Born, at a meeting with entrepreneurs on August 29, assured that underground gas storage facilities (UGS) in the country would be filled to capacity by the end of summer. She also noted that the capacity of existing terminals for receiving imported liquefied natural gas (LNG) has been increased in the country and announced the imminent commissioning of a new floating terminal in Le Havre. However, I had to admit that the only option for France this coming winter is to reduce consumption. At the same time, she stated that in order to avoid interruptions in the supply of electricity during the heating season, the country would need an urgent restart of the shutdown reactors of nuclear power plants (NPPs), although she acknowledged the existence of problems in this generation segment.

Last week it became known that the French energy company EDF has postponed the restart of four of the 12 nuclear reactors shut down due to corrosion, identified in May by the French Nuclear Safety Agency (ASN). Now in France, 32 out of 56 nuclear reactors have been shut down for various reasons.

STOCK IS STILL AVAILABLE

Underground natural gas storage facilities in France, judging by the data of Gas Infrastructure Europe (GIE), are indeed more than 90% full, Dmitry Koptev, member of the expert council, head of the media center of the Institute for the Development of Fuel and Energy Technologies (IrtTEK), notes. “So Engie is not being disingenuous when he says that he has sufficient reserves,” the expert believes. However, the specialist notes: how sufficient these reserves will be will depend on the weather, since cold weather will require more gas for heating. He recalls that more than 70% of electricity in France is generated by nuclear power plants, and in this regard, gas consumption in the generation segment is relatively small.

“Nevertheless, the loss of almost one-fifth of the consumed volumes is a blow, of course, a sensitive one under any circumstances,” Koptev specifies.

The most realistic option for France is to negotiate with Gazprom, the specialist believes. If it fails, we can only hope for LNG. There are four large regasification terminals in France, which are currently not fully loaded, the expert points out. “However, the problem remains of finding the necessary volumes of LNG in the market, which is gradually becoming scarce,” he states.

“In the longer term, Algeria has a unique opportunity to monetize new reserves,” says Aleksey Kokin, chief oil and gas analyst at Otkritie Investments. “Sonatrach made several major discoveries this year. .6 billion cubic meters per year”. However, in the next few months, France will really have to rely on LNG, the expert notes.

SOLUTION OBVIOUSLY

“How critical is the loss of 17% of the consumed gas for France?” Konstantin Simonov, director general of the National Energy Security Fund (FNEB), asks. industry”.

“By the way, it must be said that Gazprom announced a reduction in supplies, not a cessation,” Simonov notes. “By the way, the Western press also reported that there was no cessation, we are talking about a reduction.” The expert specifies that the current indicator of Gazprom’s deliveries to France, 1.5 terawatt-hours, is a physical indicator that differs significantly from the contractual one.

However, the specialist notes that there are two logics that are in conflict with each other: Engie’s logic about volumes and contradictions around contracts.

“Engie, apparently, insists that all volumes be provided,” says the head of the FNEB. “What is Gazprom responsible for? That, unfortunately, due to the actions of European “He can’t deliver these volumes. He calls it a technical force majeure. All clients have been notified about this.”

Simonov recalls the situation with turbines for the Nord Stream pipeline and the arrest of Gazprom’s trading houses in Europe. “This also applies to the situation with the Polish section of Yamal-Europe, and Ukraine’s refusal to “transit” gas through the former Luhansk region,” the expert lists. “All this leaves a serious imprint on Gazprom’s supply volumes.

As for Algeria as an alternative source, everything that could be taken from there has already been taken away by the markets for the coming winter. “Everyone has been ‘vacuumed’ already,” ironically the head of the FNEB.

“We can negotiate with Sonatrach,” says Simonov. “There are options. You can discuss, although they will not close all the holes. And the French understand this perfectly.” And if the option does not work, then the solution is obvious – to return to normal relations in the “gas sector” with Russia, the expert concludes.