MNI: EU May Announce Gas Rationing Plans July 20-Sources

European Commission's plans for dealing with potential winter energy shortages to be announced July 20 could include rationing of gas for industrial use as interruptions to Russian supplies stall attempts to build up winter storage levels, sources close to the EU’s executive told MNI.

The measures would limit supplies depending on each industry’s economic importance, the officials said, adding that their design is proving to be complex.

“This is not so easy,” said one official. “You need an order of classification, which industries are more important, more critical, like the food industry, agriculture, fertilisers, and then maybe comes steel and aluminium”.

EU energy ministers are also due to hold an emergency meeting on July 26, as suspensions of Russian supply dim hopes of boosting the bloc’s gas storage to 80% of capacity by November, an objective already downgraded from the original aim of 90% by October.

“It was going well until the Russians started to reduce supplies,” the source said. ”For the moment everyone is holding their breath and have been for the last week or two. That means that, at the moment, nothing is available for storage.”

SHUTDOWN THREAT

The threat of industrial shutdowns in the EU could become real if Russian supply is still on hold by the end of the month, the official added.

“At some point, winter storage will have to start being given some preference, given the huge volumes required.”

The Commission is also working on ways to cap oil and gas prices, but objections from some member states means that nothing workable has so far emerged from discussions which another source said were “not progressing with any kind of speed.”

Areas of disagreements include whether to just cap retail gas prices or to place a ceiling on prices paid to Russia, officials said.

Resistance from Germany, the Netherlands and Sweden is also slowing progress towards an EU bid, favoured by Italy, to overhaul electricity pricing benchmarks, which are currently closely linked to the gas price.

Average gas EU gas storage is at 60% of capacity, according to data from Gas Infrastructure Europe, an association grouping the region’s operators.

The bloc’s third-largest economy, Italy, has already managed to reduce its dependence on Russian gas from 40% of imports to 25% this year, according to Prime Minister Mario Draghi.

(Additional reporting from Santi Pinol in Rome)