The logo of French tire maker Michelin is seen on a Formula E racing car in Rome, Italy May 17, 2016 R/Alessandro Bianchi//File Photo
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AIX-EN-PROVENCE, France, July 10 (R) – France’s energy-intensive companies are accelerating contingency plans and converting their gas boilers to run on oil to avoid disruption in the event of further cuts in Russia’s gas supplies and power outages.
Several top executives gathered at a business and economics conference in the south of France over the weekend said they were preparing for possible power outages.
“What we’ve done is we’ve converted our boilers to run on gas or oil, and we can even switch to coal if necessary,” said Florent Menegaux, chief executive 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 of a shortage,” he added, saying that while a gas shortage was likely in Europe, oil was still available as an alternative.
It takes days to ramp up tire production at a manufacturing facility, Menegaux said, so maintaining a constant supply of energy is essential.
Russia reduced flow through the Nord Stream 1 pipeline, its main route for transporting gas to western Europe, to 40% of its capacity in June. Politicians and industry fear further delivery bottlenecks in connection with the Russian invasion of Ukraine, which Moscow describes as a “military special operation”.
Across Europe, industry is turning to more polluting fuels than gas as this prioritizes addressing the costs to the economy of business disruption and rising energy prices, rather than setting longer-term goals for the transition to zero-carbon fuel.
French Finance Minister Bruno Le Maire told senior corporate executives attending the conference it was irresponsible not to prepare for shortages.
“Let’s prepare for a Russian gas shutdown,” he told them. “Today it is the most likely scenario.”
France gets around 70% of its electricity from nuclear power, meaning it is far less directly dependent on Russian gas than neighboring Germany.
However, state-controlled power producer EDF (EDF.PA) is struggling to meet France’s needs due to outages at its aging power plants, adding to the strain on the rest of the energy sector.
Power production in 29 of its 56 nuclear reactors has been halted for inspection and repairs.
The French government is examining companies for companies that rely on an uninterrupted power supply.
It has also sought to lessen the impact of a rise in energy prices by capping retail gas and electricity prices until the end of the year, which has helped keep French inflation among the lowest in Europe.
A chairman of another big industrial company, who asked not to be named, told R on the sidelines of the conference that he believed all big companies were looking to switch to oil.
Automaker Stellantis (STLA.MI) is considering ways to generate its own power in the event of an energy crisis, Chief Executive Carlos Tavares said at a French factory last month.
This includes building your own energy plant or investing in an existing one to secure part of the production.
Poland’s former Energy Minister Michal Kurtyka, whose country is 70% dependent on coal, told leaders at the conference that Europe is heading for a “perfect storm” this winter.
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Reporting by Mathieu Rosemain; Edited by Barbara Lewis
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