The pour continues, swallow carefully

[Update below]This morning natural gas is flowing again in the Nord Stream 1 Pipeline. This is a principal channel for natural gas from Russia to Western Europe. The pipeline had been closed for usual summer maintenance. There was, however, concern that future flows could be held hostage to posturing related to the war in Ukraine (more and more and more).

According to Reuters, “Nord Stream 1 transports 55 billion cubic metres (bcm) a year of gas under the Baltic Sea and has been offline since July 11… A spokesperson for Austria’s OMV said Gazprom signalled it would deliver around 50% of agreed gas volumes on Thursday, levels seen before the shutdown.”

Depending on demand and availability of other sources, natural gas typically provides between one-fifth and one-quarter of European Union grid generation (see chart below). Over the last two weeks, reduced wind and heat-related high demand have increased natural gas draws. On some recent days natural gas has provided nearly one-third of EU generation.

Despite the temporary shutdown of Nord Stream 1 and strong demand, European natural gas inventories have not (yet) fallen during July and storage domes are about 65 percent full, ranging from a low of 42 percent in Bulgaria to 100 percent in Portugal. France is at 72 percent. Germany’s natural gas inventories are currently measured at 65 percent full.

According to an S&P report on German natural gas purchases, “The share of Russian gas deliveries averaged 55% in the past, but this fell to 26% by the end of June,” the [German economics] ministry said, adding that last year Russia supplied 46 Bcm of gas to Germany. The lower share in June is a result of Russia’s Gazprom cutting supplies through the Nord Stream pipeline to just 40% of capacity in mid-June, citing issues with maintenance at a key compressor station. The ministry said the claims of technical problems was a “pretext”… Germany currently does not have the infrastructure to directly import Liquified Natural Gas (LNG) (more).

The natural gas network crossing west from Russia through Ukraine continues to operate at less than half its 2020 capacity and flows. Most recent deliveries are to Veľké Kapušany, Slovakia, with Hungary a distant second-place recipient.

The prospect of natural gas shortages during a war-torn European winter has increased the need to maximize inventories and diversify channels and sources.

US LNG exports to Europe have been lower than expected partly due to the fire-related loss of the Freeport LNG terminal in early June. This is usually the second largest of seven US LNG export facilities. But other LNG operations are exporting at full capacity (more). Loss of Freeport has also meant lower than otherwise natural gas prices. Without this, current electric rates in heat-ravaged Texas (and elsewhere) would be even higher.

So obvious it is barely more (or less) than nagging, but still: Concentrating flows to fulfill demand usually enhances efficiency and always concentrates risk. The most beautifully planned bottleneck is one surprise short of becoming a chokepoint.

July 25 Update: Nord Stream 1 flows will now be cut to 20 percent of once-upon-a-time expected. According to the Wall Street Journal, “Russian state-owned energy producer Gazprom PJSC said gas exports through the vital Nord Stream pipeline to Germany would drop to about a fifth of the pipe’s capacity, blaming sanctions-related problems with turbines that have already reduced flows. The fresh reduction in the pipeline’s capacity—from 40% currently to 20%—is expected to take effect Wednesday, Gazprom said.”