Dozens of companies face closure if the energy supply is reduced, a Danish industry group says. Denmark is facing a natural gas supply crisis that could lead to a spike in domestic production costs and the closure of dozens of companies, Troels Ranis, industry director at the Confederation of Danish Industry warned on Thursday.
“Make no mistake, we are in a very serious situation and we may end up in a real gas supply crisis. And that means that companies that are not protected risk being closed down completely, and it can be costly,” Ranis told Danish broadcaster DR.
He was referring to so-called ‘unprotected companies’, which would see their gas supply cut off in case of an emergency in the Danish gas system. According to the country’s Energy Agency, about 50 companies are on the list for the gas year 2022-2023.
“Gas prices rise significantly again, and this makes it much more expensive to produce for Danish companies, and in the end the goods become more expensive – also for the Danes,” Ranis went on to say.
The comments follow last week’s spike in European natural gas prices after Russia’s Gazprom reduced deliveries via the Nord Stream pipeline by 60%. The company blamed the reduction on German equipment supplier Siemens Energy, which failed to return gas pumping units to a compressor station on time. Germany criticized the decision as political.
Supplies to Finland, Poland, Bulgaria, Denmark’s Orsted and the Dutch company GasTerra have already stopped due to their refusal to pay for gas in rubles.
According to DR, with storage roughly 70% full, Denmark is not yet running out of gas. However, it was reported last week that rising energy costs have forced some EU nations to dip into their gas reserves, leading to a decrease in the bloc’s storage levels for the first time in two months.
Denmark faces a gas supply crisis that could lead to higher production costs and company closures, an industry group warns.
EU Bloc members experiencing the first drop in storage levels since they started actively storing energy for later use. The EU’s gas storage levels decreased this week for the first time in two months, according to the latest data from Gas Infrastructure Europe, as quoted by Bloomberg.
The drop, which is seen as a sign of a deepening energy crisis in Europe, sent futures of the fuel soaring to their biggest weekly gains since late February.
“Clearly this should not be happening in the injection season,” Warren Patterson, the head of commodities strategy for ING Groep, told the news agency. “This will be unsettling for the market and is likely to keep prices supported.”
The decrease in the reserves, which are often tapped during the peak winter season, comes amid gas supply cuts to customers in Italy, Germany, France, and Austria announced by Russian energy giant Gazprom in the past two days.
On Tuesday, the Saint Petersburg firm said it was reducing gas deliveries via the Nord Stream pipeline after German equipment supplier Siemens Energy failed to return gas pumping units to its compressor station on time.
The Russian company has also cut gas supplies to Finland, Poland, Bulgaria, Denmark’s Orsted, Dutch company GasTerra, and energy giant Shell for its German contracts – for refusing to adopt the gas-for-rubles payment scheme proposed by Moscow in response to the sweeping sanctions imposed by many Western states and others.
The EU has tapped the gas reserves it was saving for winter amid cuts in Russia’s supplies to the region. Russian gas supplies to other parts of Europe via the Nord Stream pipeline were reportedly reduced by 60% this week, sending prices soaring.