Spain will apply a gas cut of 7%, half that of its EU partners

Spain breathes a sigh of relief after learning that it will be able to reduce gas consumption by around 7% and not 15%, the percentage requested by Brussels to combat an alleged Russian gas cut next winter.

Thomas Osborne
Thomas Osborne
26 July 2022 Tuesday 17:00
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Spain will apply a gas cut of 7%, half that of its EU partners

Spain breathes a sigh of relief after learning that it will be able to reduce gas consumption by around 7% and not 15%, the percentage requested by Brussels to combat an alleged Russian gas cut next winter.

The reduction is the result of the pact reached yesterday by the 27 energy ministers of the European Union. The agreement establishes as a general rule the 15% cut proposed by the Commission and, contrary to the fears of the Government and the national industry, it contemplates a series of exceptions to which Spain, in addition to Portugal, Malta and Ireland and other countries.

The decision, taken only with Hungary voting against, was received with satisfaction by the Minister for the Ecological Transition, Teresa Ribera. In a press conference after the Council of Ministers, he celebrated the common objective of 15% and highlighted the importance that "each of us do it to the extent that, considering our possibilities and other measures in terms of solidarity, we consider more appropriate”.

When the Brussels proposal was made known last week, Ribera immediately raised his voice against it, considering it unfair that the EU imposed the same obligations on countries with totally different energy models. Spain –unlike Germany, Austria, and the rest of the countries in the north and east of the EU– does not depend on Russian gas, since it imports it mainly from the United States and Algeria. So he saw no need to apply such a severe cut. The action would have little impact and would end up harming the local economy.

Yesterday it became known that Europe has chosen to soften the demands but under a series of requirements. In the case of Spain, and also Portugal, the exemption may be applied if the countries justify their low interconnection with respect to other member states and their export capacity to redirect gas consumption to other countries. States that are not interconnected to the gas network of other EU countries may also benefit from these exceptions, a scenario in which Malta and Ireland would be framed.

The list of exemptions also includes those countries whose electricity distribution network is not synchronized with the European one, as is the case of the Baltic countries, still connected to Russia, or those that are still highly dependent on gas for electricity production. . Finally, countries that have exceeded their gas storage targets, whose critical industries depend on gas as a raw material and whose consumption has increased by at least 8% in the last year compared to the average of the previous five years, also may request exceptions.

The agreement establishes that the cuts will be effective from August 1 to March 31 and that they must be calculated with respect to the average consumption of the last five years. Likewise, governments will have to prevent cuts from affecting homes, essential services, health care and defense services.

The pact also establishes that gas reductions are voluntary, unless the risk of shortage is high. A scenario that seems more and more real. The supply through the Nord Stream 1 gas pipeline will reduce its supply from today to 20% of its capacity, after the Russian state giant Gazprom reported that one more turbine must undergo maintenance and will be taken out of service. This makes it even more unlikely that the EU countries can reach their goal of filling 80% of gas deposits. Gazprom's decision cites technical reasons, but yesterday several experts (who prefer to remain anonymous) warned the Bloomberg agency that Moscow is increasing its political pressure so that European leaders reconsider the harsh sanctions they have imposed and their support for Kyiv.

With this new agreement, the EU hopes to save the situation. "We can own our own energy security this winter," said Frans Timmermans, the EU's climate chief. “We will stay the course until Ukraine is completely free from Russian aggression,” he assured.