Is a global energy crisis looming?
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London (CNN Business) --
Europe is bracing for a possible gas crisis later this week, just as a record heat wave has increased demand for energy to help cool the continent's homes and businesses.
This Thursday, the Nord Stream 1 pipeline - a crucial artery linking Russian gas to the bloc - is due to reopen after 10 days of routine maintenance work.
But concerns are growing that Russia is keeping the taps turned off in retaliation for sanctions the European Union has imposed since Moscow's invasion of Ukraine in February.
Robert Habeck, Germany's economy minister, said earlier this month that the country must "prepare for the worst."
"Anything can happen. It could be that the gas will flow again, even more than before. It could be that nothing will come at all," Habeck said in a radio interview.
ANALYSIS |
Europe is running out of time to find alternatives to Russian gas
The pipeline supplies Europe with 55 billion cubic meters of gas a year, or about 40% of its total pipeline imports from Russia.
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A complete break with gas from Moscow is not ruled out.
The country has already cut its gas exports to several European countries.
Last month, Germany, the region's largest economy, declared a "gas crisis" after Gazprom, the Russian state gas company, cut exports through the pipeline by 60%.
Gazprom blamed the move on the West's decision to withhold vital turbines because of sanctions.
A gas crisis this week would also come at the worst time.
Europe is smothered in record heat: parts of France and Spain are battling wildfires as temperatures are expected to top 40 degrees Celsius (104 degrees Fahrenheit) in the coming days.
Rising temperatures have skyrocketed the demand for electricity to power air conditioners.
Enagas, the operator of the gas transportation system in Spain, said last week that the demand for natural gas to produce electricity reached a new record of 800 gigawatt hours.
"This huge increase in demand for natural gas for electricity production has been mainly due to the high temperatures recorded as a result of the heat wave," Enagas said in a press release on Thursday last week.
Some analysts were more optimistic, taking into account Europe's alternative energy sources and the fact that the heat wave will end in the middle of this week.
"Although energy consumption in the EU will be slightly higher this week amid the heatwave due to high usage rates from air conditioning units, this will be offset by record supply from solar power generation." Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNN Business.
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Meanwhile, European countries are rushing to fill up their gas storage facilities to avoid potentially catastrophic power shortages this winter.
The "next few months will be crucial" to shore up the bloc's supplies, Fatih Birol, chief executive of the International Energy Agency, said in a press release on Monday.
"If Russia decides to completely cut off gas supply before Europe can reach a 90% storage level, the situation will be even more serious and difficult," he added.
Gas storage levels in the European Union are currently around 64%, according to the organization Gas Infrastructure Europe.
Prices for Dutch natural gas, the European benchmark, rose 3% on Monday from Friday to 165 euros ($167) per megawatt hour, according to data from the Intercontinental Exchange.
Earlier this month, fears of a major gas outage pushed prices to their highest levels since the early days of Russia's invasion of Ukraine, hovering around 183 euros ($186) per megawatt hour.
Prices have soared 129% since the beginning of the year.
Julia Horowitz has contributed her report.
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