FCG - European Union proposes 15% cut in gas use ahead of 'likely' Russian cutoff

The European Union proposed to member states Wednesday to cut gas usage by 15% until March as part of an emergency plan, as it braces for the "likely scenario" that Russia could cut off gas flows to Europe.

"Russia is blackmailing us. Russia is using energy as a weapon... therefore, in any event, whether it is partial, major cut off Russian, or total cut off Russian gas, Europe needs to be ready," European Commission President Ursula von der Leyen said.

"Overall the flow of Russian gas is now less than one third what it used to be at the same time last year," von der Leyen said while urging households, public offices and industries to start rationing.

The plan, which requires approval from a majority of member states, would allow the Commission to regulate energy cuts with the goal of saving energy in the summer to make it available for winter.

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In comments made late Tuesday after his visit to Iran, Putin said Gazprom ( OTCPK:OGZPY ) "has always fulfilled and will fulfill all of its obligations," but that gas flows on the Nord Stream 1 pipeline would fall to 20% of capacity as soon as next week if a pipeline turbine that was undergoing repairs in Canada is not returned to Russia.

Putin also said another turbine now in Russia would need maintenance starting July 26.

Even before the maintenance began, Gazprom ( OTCPK:OGZPY ) had cut deliveries on the pipeline to 40% of its capacity, blaming Canadian sanctions that had prevented the return of the turbine being repaired there, an explanation European officials have largely dismissed.

Gas shortages have already undermined the euro, which is now at parity with the dollar, and added to the risks of a looming European recession .

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