The price of gas causes a stoppage of 20% of the Spanish industry

The bone natural gas price they put the Spanish industry on the ropes. According to data from Enagás, heavy consumers have already reduced by 20% its consumption last June and the trend has continued so far in July.

Companies, which have to deal with historically high gas prices, have advanced maintenance, have sought to change the sources of generation and those who had no other means faced production stoppages.

According to data provided by the technical manager of the gas system, the sectors most affected in this case are electricity produced by cogeneration which, after the approval of the gas ceiling, has stopped practically half of its production, which focuses on sectors such as food or ceramics or bricks.

Refining sought alternative formulas to be able to produce in its refineries without using natural gaswhile other sectors such as text, agri-food, paper or chemicals are encountering difficulties in maintaining their production.

According to data from GasIndustrial, the demand for gas for industry is even lower than that recorded in 2020, in the midst of the covid 19 crisis. As the president of GasIndustrial, Verónica Riviere explains, “industry stops natural gas price“.

Gasindustrial also expressed concern over the fine print of the gas deal struck by the government with the European Commission at yesterday’s Council of Ministers. According to Rivière, we must wait to see the fine print of the document, which is not yet available. The 7% drop in consumption could be an additional blow for industry according to the consumption considered and the processing reserved for combined cycle power plants.

Entsog estimates that if Russia cuts gas, Spain will have to reduce consumption by 2-5%

According to the calculations carried out in the sector, the impact of the reduction in consumption that Brussels wishes to obtain from next August 1 until March 31, it can be around 20% if gas plants are left out.

The gas consumption of combined cycles has increased by 127% since entry in application of the so-called Iberian exception. This measure led to a strong increase in electricity exports to France as a lower price was recorded on the wholesale market.

Brussels has imposed on Spain not to impose limitations on the supply of our northern neighbour, which is experiencing serious problems with the supply of electricity – due to problems with its nuclear power plants – and gas due to the reduction of transit from Germany.

El Musel would become a gas storage and distribution hub to Europe

This is why, in recent months, Spain has doubled its electricity and gas exports to France to “assist” its energy needs. The Spanish government has until next September to present its emergency plan. The Vice-President and Minister for the Ecological Transition, Teresa Ribera, brought together companies, meteorologists, parliamentary groups to prepare said plan and it is expected that this next Friday during the Council of Ministers to be held, some measures will already be included in this line.

The emergency plan drawn up by the Spanish government should include, among other measures, the reopening of the The Musel to serve as storage and gas distribution center to Europe. A route for small LNG carriers between Barcelona and Panigaglia will also be planned, which would serve to support supplies from Italy but also from Austria and the Czech Republic.

While progress is being made on this regulation, Entsog, the body which brings together the managers of European gas systems, yesterday presented a report on the impact of a possible cut in the supply of Russian gas in which it issues a serious warning: if Russia completely cuts off the gas supply, Europe will not be able to face the winter. Base case simulations show that in the event of a complete disruption of Russian supply (frome the levels that existed on July 1, 2022), the demand cannot be satisfied during the winter season 2022/2023, and the difficulties will be greater to fill the reserves for the following winter.

According to said document, without the immediate application of mitigation measures, there will be a depletion of most European gas storages during the winter period 2022/2023. For this reason, Entsog explains that mitigation measures are needed more effective measures to be adopted, such as increasing European capacity to improve cooperation between Member States and facilitate more efficient use of storage facilities.

The agency also carried out a study on the percentage of supply cuts would be necessary and, for example, in the case of Spain, the amount is estimated at 5% in the medium scenario.


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