By Scott Kanowsky
Investing.com -- Russian-backed energy firm Gazprom (MCX:GAZP) will further reduce deliveries to France's Engie SA (EPA:ENGIE) following a dispute between the companies over some contracts, according to a statement from Engie released on Tuesday.
Engie did not specify what disagreements had arisen, but said that deliveries from Gazprom have already fallen "substantially" since the outbreak of the war in Ukraine. Engie added that the level of supplies of Russian gas it now receives has dropped to 1.5 Terrawatt hours per month, in a sign of the impact of slowing flows out of the country to Europe.
However, Engie claimed that it has enough volumes on hand to meet commitments to its customers, as well as "several measures" in place to soften the blow from the disruption.
Paris-listed shares in Engie were higher in late-morning European trading after the announcement.
Worries have been growing around Europe's ability to handle a possibly significant drawdown in Russian gas supplies. Exacerbating these concerns in the immediate term is a plan by Gazprom to temporarily stop flows to Germany through the key Nord Stream 1 pipeline later this week. Gazprom has said the pause, which is set to last for three days from August 31, is for maintenance purposes.
On Monday, French Prime Minister Elisabeth Borne called on domestic firms to slash energy consumption this winter to stave off a possible shortage, warning that those who do not could face rationing. Elsewhere, the Chief Executive of Shell (LON:SHEL) - Europe's biggest oil and gas company - flagged that the region may be forced to endure a "number of winters" without sufficient gas supplies.
However, European Union officials have made progress in their bid to shore up supplies ahead of the colder months. According to inventory data from Gas Infrastructure Europe, reserves are at 79.94% of total capacity as of Sunday, just under the bloc's target of at least 80% that it is aiming to reach by the beginning of November.