Fearing Russian gas shut-off, France’s industry turns to oil

The brand of French tyre maker Michelin is seen on a System E racing automotive in Rome, Italy Could 17, 2016 REUTERS/Alessandro Bianchi//File Photograph

AIX-EN-PROVENCE, France, July 10 (Reuters) – France’s energy-intensive firms are dashing up contingency plans and changing their fuel boilers to run on oil as they search to keep away from disruption within the occasion any additional discount in Russian fuel provides results in energy outages.

Gathered over the weekend at a enterprise and economics convention in southern France, a number of prime executives mentioned they have been making ready for doable blackouts.

“What we have performed is we have transformed our boilers, so that they’re able to working on fuel or oil, and we will even change to coal if we have to,” mentioned Florent Menegaux, the boss of Michelin (MICP.PA), one of many world’s main tyre-makers.

“The goal is to keep away from having to close down a plant in case we face a scarcity,” he added, saying that whereas a fuel scarcity in Europe was possible, oil would nonetheless be obtainable instead.

It takes days to start out up tyre manufacturing at a producing plant, Menegaux mentioned, making it important to keep up a gentle vitality provide.

Russia in June decreased flows by way of the Nord Stream 1 pipeline, its predominant route for delivery fuel into western Europe, to 40% of capability. Politicians and business are involved there can be additional provide constraints linked to Russia’s invasion of Ukraine, which Moscow describes as a “particular navy operation”.

Throughout Europe, business has been resorting to extra polluting gas than fuel because it provides priority to tackling the price to the economic system of enterprise disruption and surging vitality costs, quite than longer-term targets to change to zero carbon gas.

French Finance Minister Bruno Le Maire advised the highest company executives attending the convention it could be irresponsible to not put together for shortages.

“Let’s put together for a cut-off of Russian fuel,” he advised them. “At the moment it is the almost certainly state of affairs.”

France, depends on nuclear energy for round 70% of its electrical energy, that means it’s far much less straight dependendent on Russian fuel than neighbouring Germany.

Nevertheless, the state-controlled electrical energy producer EDF (EDF.PA) is struggling to satisfy France’s wants due to outages at its ageing energy crops, growing the pressure on the remainder of the vitality sector.

Vitality manufacturing at 29 of its 56 nuclear reactors has been halted by inspections and repairs.

The French authorities is checking company-by-company which of them rely upon an uninterrupted vitality provide.

It has additionally sought to scale back the affect of a surge in vitality costs by capping retail fuel and energy costs till the tip of the 12 months, which has helped to maintain French inflation among the many lowest in Europe.

A boss of one other massive industrial firm, who requested to not be named, advised Reuters on the sidelines of the convention he believed all huge companies have been a change to grease.

Automaker Stellantis (STLA.MI) is weighing choices to supply its personal vitality in case of an vitality crunch, Chief Government Carlos Tavares mentioned at a French manufacturing facility final month.

These embrace constructing its personal vitality plant or investing in an current one to safe a part of the manufacturing.

Poland’s former vitality minister Michal Kurtyka, whose nation depends on coal for 70% of its vitality, advised executives on the convention that Europe was headed for a “good storm” this winter.

Reporting by Mathieu Rosemain; modifying by Barbara Lewis

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