MNI: France Seeks Energy Funding For Gas Rationing-Officials

European Union energy ministers are set to agree a compromise on mandatory gas rationing at an emergency meeting in Brussels Tuesday, but with opposition from countries including Spain, Portugal and Greece, sources said unblocking agreement may require a Franco-German deal on financing for the REPowerEU programme for transitioning away from dependency on Russian gas.

Officials preparing Tuesday’s meeting have already watered down last week’s European Commission proposals for mandatory consumption cuts should Germany and the Visegrad countries run out of gas, in a so-called “Black Scenario” for winter. Countries which less dependent on Russian supplies, like Spain, Portugal, Greece and Cyprus, have been supported by France in opposing the plan, with officials suggesting that a high-level deal between Paris and Berlin may be key.

“The suspicion is that the Commission might not be able to get sufficient votes for a majority. My guess is that France will be key. It is less vulnerable to Russian gas, while Germany is the biggest demandeur for rationing and also on the solidarity clause,” one official said.

TRYING TO GET EVERYTHING POSSIBLE

Under the Commission proposal, countries with an energy surplus would commit to supplying those which run short of gas this winter if an EU alert mechanism is activated. However, the latter would have to show that they have taken all necessary measures to restrict energy demand.

“France is trying to get everything out of this as possible, including putting pressure on Germany on the big issues of the moment, including more favourable financing terms for NGEU and REPowerEU,” a source said, referring to the EU’s EUR800 billion pandemic recovery programme and the plan to reduce dependence on Russian fossil fuels. “They are now seeing that they have a very strong hand.”

Some EUR225 billion in NextGenerationEU NexGenEU loans are already available to pay for the REPowerEU, although uptake continues to be patchy. Sources did not specify what France would seek in addition to this. (See MNI: Gas Shortages To Delay EU Fiscal Rules Overhaul-Officials)

The Commission is said to be optimistic that a compromise can be achieved this week, although it would be satisfied if rationing is voluntary for the moment, as it monitors progress in building gas stocks as well as flow levels through the newly-reopened Nordstream 1 pipeline. The EU has set a target of 80% of capacity for stocks by the start of November, with any further actions by member states more likely by the end of September or early October.

“They would like to keep the threat of compulsory rationing as the hammer in the background,” an official said.