Gazprom tightens gas squeeze on France's Engie

Russia's Gazprom will reduce gas deliveries to Engie from Tuesday in a dispute over contracts, the French utility said, deepening winter energy supply concerns.

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

In its statement, Engie gave no details on the nature of the dispute between it and Gazprom over the application of contracts.

Gazprom did not immediately respond to a Reuters request for comment.

Engie's deliveries from Gazprom have already decreased substantially since the beginning of war in Ukraine in February, with recent monthly supply of 1.5 terawatt-hours (TWh), the utility said.

In 2021, Gazprom supplied 121 TWh of gas to Engie, or 20% of its total procurement, according to analysts at Morningstar.

"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, but added that France has diversified its energy supplies and the latest cuts will not compromise its winter gas supply.

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.

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 the country's 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. 

France is less reliant than some neighbours on gas imports from Russia, which account for about 17% of its gas consumption.

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.