Berlin triggered the second of its three-step plan to deal with gas shortages after the Kremlin-controlled energy giant Gazprom, the country’s biggest gas exporter, throttled delivery via the Nordstream pipeline by around 60% last week. Germany’s gas reserves are at 58% capacity, and the government now expects a gas shortage by December if supplies don’t pick up, Economy Minister Robert Habeck said.
The second step, dubbed the “alarm level” is a prerequisite for the government to enforce some of the gas-saving measures it announced at the weekend, including substituting coal to gas for power generation and creating financial incentives for companies that consume less gas.
Rationing, which would come in the third step, would focus on industry and could severely impact companies that use gas as fuel or as a raw material for production, likely pushing Europe’s biggest economy into recession, economists and company executives have warned.
Germany grew heavily dependent on Russian gas flowing through pipelines over decades and has struggled to diversify supplies. It is now scrambling to build new infrastructure to switch to liquefied natural gas delivered by ships. But that transition is costly and takes time, making a temporary shortage this winter increasingly likely.
Under German law, strategic gas reserves must be 80% full by October and 90% by November—a scenario now becoming very unlikely to be met. When the government triggers the third level of the plan, known as the “emergency phase,” the country’s energy regulator can begin to ration gas.
“We have a disruption of the gas supply in Germany…as of now gas is in short supply,” Mr. Habeck told reporters Thursday.
The minister said he couldn’t rule out that gas rationing for the industry would have to be eventually introduced, but said that all this would likely be avoided due to other measures being put in place by his government.
“I hope this will never happen,” he said.
Mr. Habeck called on consumers, who are initially protected from rationing by law, and industry to start saving gas, which residential users use mainly for heating, and said that energy prices would keep rising, warning that “winter is coming—we must do what’s necessary now.”
Mr. Habeck said the market is still able to provide enough gas at the moment but warned that the government had to act because of what he called Russia’s politically induced shortage of fossil fuels, which could eventually make the cost of gas prohibitively expensive for some companies, forcing them to shut down or relocate.
Energy providers and some of their customers could face insolvency if gas prices continue to rise as expected, experts have warned. Recognizing the risk, the government has passed legislation that would make it easier for them to pass on price increases to customers.
“We are ready to support Ukraine and defend freedom, and there will be a price to pay for that…What we are doing here is a collective effort,” said Mr. Habeck, who has called Moscow’s throttling of gas supplies an economic attack on Germany by President Vladimir Putin.
Moscow has blamed the shortfall on missing turbine parts that were stuck in Canada due to Western sanctions. European officials and analysts have dismissed the explanation and called the restrictions a political move to put pressure on Europe and retaliate for the sanctions.
The Kremlin on Thursday dismissed Berlin’s accusations and said that Moscow remains a “reliable” supplier of natural gas.
“Our German counterparts are well aware of all technological cycles of gas pipeline maintenance…so it’s strange to call it politics,” the Kremlin’s spokesman Dmitry Peskov told reporters.
Supplies could fall further as the Nordstream pipeline linking Russia to Germany is due for a scheduled maintenance closure on July 11. The closure would normally be for just over 10 days but analysts and officials are concerned the pipeline may not reopen at all this time.
Russia’s throttling of gas supplies has raised fears across Europe that several nations could be faced with a fuel shortage in the winter. It has also increased gas prices, putting additional pressure on economies that are already struggling with high inflation.
The German government said on Sunday it would restart coal-fired power plants and offer incentives for companies to curb gas consumption, part of a strategy to reduce gas consumption and divert gas deliveries to storage facilities to ensure that the country has enough reserves to get through the winter. German companies and gas distributors are currently still able to procure enough gas and feed their reserves, albeit at high prices.
“The situation is tense and a worsening cannot be ruled out. The gas supply in Germany is stable at the moment,” the country’s energy regulator, the Federal Network Agency, said in its daily report Thursday.
Mr. Habeck blamed previous governments for allowing Germany to become so dependent on Russia for energy while at the same time failing to find other sources of energy over previous decades.
“The failures of the last decades have led us into this situation—not only the growing dependence on Russia, but also the inability to generate outer sources of energy…we suffer the consequences now,” Mr. Habeck said.
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