Gazprom tightens gas squeeze on France's Engie amid dispute over contracts

Engie says Gazprom to further reduce supplies from Tuesday; Moscow using gas as a 'weapon of war', says France

Russia's Gazprom will further squeeze gas deliveries to Engie, one its main European utilities, from Tuesday in a dispute over contracts, deepening concerns about Europe's winter energy supply.
 

Europe is already on notice that Gazprom will shut off the Nord Stream 1 gas pipeline to Germany from Aug. 31 to Sept. 2 for maintenance, and there is some concern that Moscow, which has cut the pipeline's supply to just 20% of capacity, may step up pressure by delaying the restart.
 

In its statement, Engie, which holds a 9% stake in Nord Stream, gave no details on the nature of its dispute with Gazprom over the application of contracts.
 

Gazprom did not respond to questions from Reuters, including whether the additional cut to deliveries was linked to the Nord Stream 1 shutdown.
 

"Very clearly Russia is using gas as a weapon of war and we must prepare for the worst case scenario of a complete interruption of supplies," France's Energy Transition Minister Agnes Pannier-Runacher told France Inter radio.
 

Gazprom is not respecting its contracts, an aide to Pannier-Runacher told Reuters, adding that France has diversified its energy supplies and the latest cuts will not compromise its winter gas supply.
 

Russia now makes up less than 4% of Engie's gas imports compared with 17% before the war in Ukraine, an Engie spokesperson said. Supply in recent months from Russia had fallen to just 1.5 terawatt-hours (TWh), the utility said.

Engie declined to say to what levels volumes would now fall.
 

France is not as dependent on Russian gas as some of its European peers. Before the war in Ukraine, Norway supplied more than a third of France's gas, with the Netherlands, Algeria and Qatar also delivering smaller volumes, government data showed.
 

Winter Storage

Government spokesman Olivier Veran reaffirmed France would fill its gas reserves by the end of the summer.
 

"We're ahead of schedule," he told franceinfo radio. The government says reserves are now about 90% full.
 

The French 2023 baseload power price fell sharply in a bout of profit-taking after record highs on Monday, but at 730 euros per Megawatt-hour (MWh), it remained ten times higher than during the same period in 2021, reflecting deep uncertainty over energy supplies.
 

Engie said it had taken action to protect itself.
 

"Engie had already secured the volumes necessary to meet its commitments towards its customers and its own requirements, and put in place several measures to significantly reduce any direct financial and physical impacts that could result from an interruption to gas supplies by Gazprom," the statement said.
 

Russia's disruption and reduction in supply has sent gas prices soaring and forced European governments to scramble for alternative supply ahead of the winter.
 

In France, the problem is exacerbated by outages in the nuclear sector where output is at a 30-year low. Nuclear accounts for some 70% of its power production.
 

Prime Minister Elisabeth Borne on Monday urged French companies to draft energy savings plans by next month, warning they would be hit first if France is forced to ration supply of gas and electricity.
 

Engie confirmed on Monday that it was in talks with Algeria's Sonatrach to increase gas imports from the North African country in the medium term.