Russia will keep gas cut if sanctions continue while boosting its price

The cost rises 12% to 245 euros/Mwh and pulls the electricity rate again while the Government insists to the industry that there will be no cuts

Jose Maria Waiter

Russia has publicly admitted what all Europeans have feared for several weeks: that the cutoff of gas supplies to Europe by Nord_Stream I, announced last Friday, will not be temporary, but indefinite. At least until the EU, US and Canada lift the sanctions imposed against Moscow for the invasion of Ukraine. "The Western collective is to blame for the situation having reached this point," Putin's spokesman said in an informative appearance on Monday.

Its justification is that the sanctions have ended the technical possibilities for the gas pipeline to operate in good conditions. "Everything rests on a single unit that needs serious maintenance," he insisted. What Russia is referring to is the fact that the turbine repaired in Canada and transferred to Germany, where it is located, needs a Western commitment that sanctions will be lifted to start it up on Russian territory. Since that doesn't look like it's going to happen, the Kremlin will keep Europe without gas.

Not expected throughout the weekend, the first reaction to the gas cut that Russia announced late on Friday has gone exactly the worst possible way. The price of natural gas on the international market rose considerably yesterday: 12% to around 245 euros/Mwh. At some points in the session it came close to 300 euros/Mwh, close to the 340 it set in mid-August, in what was its all-time record.

The umpteenth scare with the bill arrives today. The average price of electricity generation will increase by 20% to above 291 euros/Mwh. It will thus approach 300 euros/MWh, although it will still remain far from the maximum levels of the beginning of last week, when it touched 490, the highest since the entry into force of the 'Iberian exception'. Without the gas cap, the total cost would have risen to 364_euros/Mwh, 21% more than what is actually going to be paid. The electricity bill for August was already the most expensive in history. September goes the same way.

Companies ask for help

In this context, the industrial and commercial sectors held meetings on Monday with the ministers of Ecological Transition, Teresa Ribera, and of Industry, Commerce and Tourism, Reyes Maroto. They did so to address the measures of the supply contingency plan, which the Government is preparing to send to Brussels, with the actions to be taken in various scenarios; among them, the total cut of the supply in Spain in winter.

The Alliance for the Competitiveness of Spanish Industry, made up of organizations such as Anfac and Sernauto (automotive), AOP (refining), Apapel, Feique (chemicals and pharmaceuticals), FIAB (food and beverages), Oficemen (cement), Primigea (minerals ) and Unesid (steel), asked the ministers to incorporate new aid, such as providing a solution to the "unsustainable" situation of cogeneration; a change in the adjustment system of the Iberian cap for industry; the reactivation of the mechanisms for voluntary and paid stops for gas and electricity; or a vehicle renovation plan. "The situation is critical," warned Elisabet Alier, who represented the organization at the meeting.

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