Fearing that Russian gas will stop, the French industry is turning to oil

The logo of French tire manufacturer Michelin appears on a Formula E racing car in Rome, Italy, May 17, 2016 REUTERS/Alessandro Bianchi // File Photo

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AIX-EN-PROVENCE, FRANCE, July 10 (Reuters) – Energy-intensive French companies are speeding up contingency plans and converting their gas boilers to run on oil as they seek to avoid disruption in the event of another drop in Russian gas supplies. for power outages.

Several senior executives, gathered over the weekend at a business and economics conference in southern France, said they were preparing for possible power outages.

“What we’ve done is we’ve converted our boilers, so they’re able to run on gas or oil, and we can even switch to coal if we need to,” said Florent Minigot, head of Michelin. (MICP.PA)One of the world’s leading tire manufacturers.

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“The goal is to avoid having to shut down a plant in the event we encounter a shortage,” he added, noting that although gas shortages may occur in Europe, oil will still be available as an alternative.

Menegaux said it takes days to start producing tires at a plant, making it necessary to maintain a steady supply of power.

Russia in June reduced flows through the Nord Stream 1 pipeline, its main gas shipping route to Western Europe, to 40% of its capacity. Politicians and industry worry that there will be more supply restrictions linked to Russia’s invasion of Ukraine, which Moscow describes as a “special military operation.”

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Across Europe, industry is turning to fuels that are more polluting than gas as it gives precedence to tackling the cost incurred in the economy of business disruption and rising energy prices, rather than the long-term goals of switching to a carbon-neutral fuel.

French Finance Minister Bruno Le Maire told top corporate executives who attended the conference that it would be irresponsible not to prepare for the shortage.

“Let’s prepare for cutting off Russian gas,” he told them. Today is the most likely scenario.

France relies on nuclear power for about 70% of its electricity, which means it is less directly dependent on Russian gas than neighboring Germany.

However, the state-controlled electricity producer EDF (EDF.PA) It is struggling to meet France’s needs due to outages at its old power plants, adding pressure on the rest of the energy sector.

Energy production at 29 of its 56 nuclear reactors has been halted through inspections and repairs.

The French government is checking company after company that relies on uninterruptible power supplies.

It also sought to reduce the impact of higher energy prices by capping the retail prices of gas and energy through the end of the year, which helped keep French inflation among the lowest in Europe.

The chairman of another large industrial company, who asked not to be named, told Reuters on the sidelines of the conference that he believed all major companies were looking to switch to oil.

Automaker Stellantis (STLA.MI) CEO Carlos Tavares said at a French plant last month that he is weighing options for his own energy production in the event of an energy crisis.

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These include building its own power plant or investing in an existing plant to secure a portion of the production.

Former Polish Energy Minister Michal Kortica, whose country relies on coal for 70% of its energy, told executives at the conference that Europe was heading for a “perfect storm” this winter.

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(Reporting by Matthew Rosemin) Editing by Barbara Lewis

Our criteria: Thomson Reuters Trust Principles.

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