Germany considers possible rationing of natural gas after Russia cut supplies

Berlin launched its second three-step plan to deal with gas shortages after the Kremlin-controlled energy giant Gazprom, the country’s largest gas exporter, throttled delivery via the Nordstream pipeline by nearly 60% last week. German Economy Minister Robert Habeck said Germany’s gas reserves are at 58% of capacity, and the government now expects a gas shortage by December if supplies do not recover.

The second step, dubbed the “alert level”, is a prerequisite for the government to enforce some of the gas-saving measures it announced at the weekend, including replacing coal with gas for power generation and creating financial incentives for companies that consume less gas.

Rationing, which will come in the third step, will focus on industry and could severely impact companies that use gas as fuel or as a raw material for production, potentially pushing Europe’s largest economy into recession, economists and company executives have warned.

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Germany has grown increasingly dependent on the flow of Russian gas through pipelines for decades and has struggled to diversify supplies. It is now scrambling to build new infrastructure to switch to ship-borne LNG. But this transition is expensive and time-consuming, raising the possibility of a temporary shortage this winter.

Under German law, strategic gas reserves must be 80% full by October and 90% by November – a scenario that is now unlikely to materialize. When the government launches the third level of the plan, known as the “emergency phase,” the country’s energy regulator can begin rationing gas.

“We have a gas supply interruption in Germany … So far there is a shortage of gas supplies,” Habeck told reporters on Thursday.

The minister said that he could not rule out the eventual imposition of gas rationing for the industry, but said that it was possible to avoid all this due to other measures taken by his government.

“I hope this never happens,” he said.

Mr Habek called on consumers, who were initially protected from rationing by law, and the industry to start saving gas, which is mainly used by residential users for heating, and said energy prices would continue to rise, warning that “winter is coming, we must do what is necessary.” right Now “.

Mr Habek said the market can still supply enough gas for now, but cautioned that the government must act due to what he called a fossil fuel shortage caused by Russian policy, which could make the cost of gas too expensive for some companies. , forcing them to close or move.

Experts have warned that energy providers and some of their customers could face bankruptcy if gas prices continue to rise as expected. Recognizing the risks, the government has passed legislation that will make it easier for them to pass on price increases to customers.

Mr Habeck, who described Moscow’s throttling of gas supplies as an economic attack on Germany by the president, said:

Russian President Vladimir Putin.

Moscow blamed the shortage on missing turbine parts that were stuck in Canada due to Western sanctions. European officials and analysts rejected the explanation, calling the restrictions a political move to pressure Europe and retaliate against the sanctions.

The Kremlin on Thursday rejected Berlin’s accusations and said Moscow remained a “reliable” supplier of natural gas.

“Our German counterparts are well aware of all the technological cycles for the maintenance of gas pipelines … so it is strange to call it a policy,” Kremlin spokesman Dmitry Peskov told reporters.

Supplies could drop further as the Nordstream pipeline connecting Russia to Germany is scheduled to shut down on July 11. The closure will usually be for a little over 10 days, but analysts and officials are concerned that the pipeline may not reopen in all that time.

Russia’s throttling of gas supplies has raised concerns across Europe that many countries may be exposed to it Facing fuel shortage in winter. It also increased gas prices, putting more pressure on economies already suffering from high inflation.

The German government said on Sunday it would restart coal-fired power plants and provide incentives for companies to reduce gas consumption, as part of a strategy to cut gas consumption and divert gas shipments to storage facilities to ensure the country has sufficient reserves to access it. winter. German companies and gas distributors are currently still able to buy enough gas and feed their reserves, albeit at high prices.

The situation is tense and its aggravation cannot be ruled out. Germany’s gas supply is currently stable, the country’s energy regulator, the Federal Network Agency, said in its daily report on Thursday.

Mr. Habeck blamed previous governments for allowing Germany to become too dependent on Russia for energy while at the same time failing to find other sources of energy over the past decades.

“The failures of the past decades have led us to this situation – not only the increased dependence on Russia, but also the inability to generate external sources of energy… We are suffering the consequences now,” said Mr. Habek.

write to Bojan Pancevski at [email protected] and Georgi Kantchev at [email protected]

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