Putin puts pressure on gas supplies in Europe. Policy makers are concerned

BRUSSELS – European leaders are increasingly concerned about the possibility of a complete shutdown of gas supplies from Russia, as Italy calls for a new meeting to discuss the matter.

Gazprom, Russia’s state-backed energy supplier, has cut gas flows to Europe by about 60% over the past few weeks, prompting Germany, Italy, Austria and the Netherlands to suggest they may turn to coal again.

It comes as Europe – which receives nearly 40% of its gas through Russian pipelines – is trying to rapidly reduce its dependence on Russian hydrocarbons in response to the Kremlin’s nearly four-month offensive in Ukraine.

Russia is reducing gas supplies little by little – to some countries [by] almost 100%; For others, the 10, 15 per cent cut, Josep Borrell, the EU’s top diplomat, told CNBC on Friday.

“I don’t think they will cut off gas overnight, especially since we go into summer and during summer, gas is not a strategic weapon. But winter can be tough and we have to be prepared in Europe.”

When asked if he was concerned that Russia could cut off gas supplies entirely, Luxembourg Prime Minister Xavier Bettel told CNBC: “I’m well aware that they can. It’s their natural choice. They can close or open.”

He stressed the importance of all 27 EU member states agreeing to their approach to the issue. “In Moscow one person can decide for himself to cut off the power to Europe.”

Employees pass under pipes leading to oil storage tanks at the oil and gas central processing plant of the Salym Petroleum Development oilfield near the Bazhenov shale formation in Salym, Russia.

Andrei Rudakov | Bloomberg | Getty Images

European Parliament President Roberta Mezzola said on Thursday that the situation was worrying.

“we have had [concerns] From day one, at the end of the day, some countries depend more than others on Russian gas. Not only in the short and medium term, we need to find solutions for that.”

Meanwhile, Italy has requested an EU-wide meeting next month to further discuss energy and economic conditions, according to three EU officials who did not want to be named due to the sensitivity of the matter.

Recession fears

The decline in gas flows has deepened fears that the European Union may be about to face a difficult economic period. Analysts at Berenberg said this week that recent gas cuts mean Europe’s new base case is recession.

“Hard hit by the US energy price shock, we expect the eurozone economy to enter recession before the US,” analysts at Berenberg said in a note on Tuesday.

EU leaders have so far refused to talk about the possibility of a new recession or economic crisis, but acknowledged that the coming winter will be complicated.

Speaking to CNBC on Friday morning, Swedish Prime Minister Magdalena Andersson said she is ready to meet the leaders again next month, provided the bloc announces steps to tackle economic pressures.

“We are definitely in a difficult economic situation with inflation and shortages of gas and electricity,” she said.

Mitsola of the European Parliament agreed. “The next few months will be very difficult and we are concerned that we are facing, for example, an expensive and difficult winter from an energy perspective.”

CNBC’s Sam Meredith contributed to this report

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