Further reductions of Russian natural gas flows into the EU have deepened the economic bloc's energy crisis, with Germany's chemical giant BASF cutting ammonia production further due to soaring prices.
Gazprom has reduced gas flow into the EU further. Photo: JOHN MACDOUGALL
Physical flows and requests for Russian natural gas flows through Nord Stream 1 into Germany fell today after Gazprom further cut capacity of the pipeline, which provides more than a third of Russian gas exports to the European Union.
Data on the Nord Stream AG website showed nominations nearly halved from Wednesday, 8am (Central European Time) and stood at 14,423,764 kilowatt hours an hour (kWh/h) for 0800-0900 CET (0600-0700 GMT) onwards, down from levels above 27,000,000 kWh/h previously.
Similarly, physical flows of gas through the pipeline declined to 24,746,896 kWh/h for 7am-8am (CET), down from 27,776,096 kWh/h an hour earlier.
State-controlled Russian energy giant Gazprom has said flows will fall to 33 million cu/m per day - a fifth of the normal capacity - from today because it needed to halt the operation of a gas turbine at a compressor station on instructions from an industry watchdog.
Eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany also declined on Wednesday morning, data from pipeline operator Gascade showed.
Exit flows at the Mallnow metering point on the German border stood at 1,947,970 kWh/h versus levels around 3,200,000 kWh/h in the previous day.
The reduction comes as Germany's BASF, the world's largest chemical company, cuts ammonia production further due to soaring natural gas prices, with potential ramifications from farming to fizzy drinks.
Germany's biggest ammonia maker SKW Piesteritz and number four Ineos also said they could not rule out production cuts as the country grapples with disruption to Russian gas supplies.
Ammonia plays a key role in the manufacturing of fertiliser, engineering plastics and diesel exhaust fluid. Its production also yields high-purity carbon dioxide (CO2) as a byproduct, which is needed by the meat and fizzy drinks industries.
"We are reducing production at facilities that require large volumes of natural gas, such as ammonia plants," BASF chief executive said in a media call after the release of quarterly results, confirming an earlier Reuters' report.
He added BASF would purchase some ammonia from external suppliers to fill gaps but warned farmers would face soaring fertiliser costs next year.
Production lines for raw material syngas, a mixture of carbon monoxide and hydrogen, and basic petrochemical acetylene were also candidates for cutbacks to save on gas, the CEO said.
Unlike many European countries, Germany has no liquefied natural gas (LNG) port terminals to replace Russian pipeline gas. That means companies are under political and commercial pressure to reduce gas intensive activities if gas deliveries are cut further.
BASF cut ammonia output at its headquarters in Ludwigshafen and at its large chemical complex in Antwerp, Belgium, in September.
Fertiliser giant Yara, which runs Germany's third-largest ammonia production site in the northern town of Brunsbuettel, said its output across Europe was currently 27% below capacity due to the surge in gas prices.
It would not specify the Brunsbuettel rate, but added the site does not deliver any high-purity CO2.
SKW said it was in the process of resuming full production after a scheduled maintenance shutdown but the future capacity utilisation rate was extremely difficult to predict.
Chemical companies are the biggest industrial natural-gas users in Germany and ammonia is the single most gas-intensive product within that industry.
Companies that reduce ammonia production may lose market share to imports from overseas suppliers with access to cheap gas, or in Germany might accept compensation payments under a potential gas rationing programme to encourage manufacturers to quickly scale back production to balance out supply cuts.
-Reuters
