Germany raises degree of alarm over Russia fuel disruption


Germany has raised its degree of alarm over disruptions to Russian fuel provides, saying Moscow’s resolution to weaponise its power exports had plunged Europe’s largest economic system right into a “gas crisis”.

Berlin triggered the second stage of its nationwide fuel emergency plan on Thursday, 9 days after Russia decreased fuel provide by way of the Nord Stream 1 pipeline below the Baltic Sea by 60 per cent. The third and highest stage of the nationwide fuel plan is the “emergency” degree.

“We are in a gas crisis,” mentioned Robert Habeck, economic system minister. “From now on, gas is a scarce commodity . . . . Prices are already high and we must prepare for further increases. That will have an effect on industrial production and weigh heavily on consumers. It is an external shock.” Habeck mentioned fuel was being deployed “as a weapon against Germany”.

The transfer to the second stage of the plan alerts that the authorities are seeing a “substantial deterioration in the gas supply situation”, however one which the market can take care of with out resort to “non-market based measures”. Triggering the second stage won’t result in the rationing of fuel to industrial prospects.

The authorities additionally mentioned it was not going to activate a legislation that allowed power firms to go on hovering prices to prospects after pushback towards the measure from business.

Futures contracts linked to TTF, the European wholesale fuel worth, rose 4.7 per cent on Thursday morning to €132.25 per megawatt hour.

Germany’s fuel storage amenities are at the moment 58 per cent full, larger than right now final yr, however Habeck mentioned that if fuel provides remained at their present low degree, Germany received’t attain its objective of getting storage as much as 90 per cent capability by December until extra measures are taken.

Gas importers are being pressured to make up for the shortfall in fuel being provided by way of Nord Stream 1 by shopping for fuel on the spot market at a lot larger costs.

Habeck was talking simply days earlier than Gazprom, Russia’s fuel big, is because of perform annual upkeep on Nord Stream 1, a transfer that may deliver provide by way of the pipeline to a cease.

Officials are nervous that Gazprom may cease fuel deliveries utterly whereas NS1 is closed for repairs. “The supply situation is tight enough without NS1 being shut down,” mentioned one.

Carsten Rolle of the BDI, Germany’s enterprise confederation, mentioned that in earlier intervals of scheduled upkeep on NS1 Gazprom had made up the shortfall by sending Germany extra fuel by way of Ukraine, or through the Yamal-Europe pipeline by way of Poland.

“But there is a concern that they will not do that this year,” he mentioned. “Already they have cut flows through NS1 by 60 per cent and not made up for it with increased flows through other pipelines.”

Markus Krebber, chief government of German power firm RWE, mentioned it was “very clear” that the choice to cut back fuel flows was “political”, “because it’s not only the [gas] coming via Nord Stream 1 that [is] below contracted volumes, but also via other pipelines.”

Rolle mentioned Gazprom may additionally use the deliberate upkeep on NS1 “as a pretext to stop gas supplies for much longer, citing various technical reasons”.

“What is the guarantee that at the end of the maintenance period that you actually do get any gas coming back on?” mentioned James Waddell, an analyst at Energy Aspects.

So far, the discount in flows by way of NS1 has had little tangible affect on Germany’s provides as a result of fuel consumption throughout the summer season is simply 1 / 4 or a fifth of the quantity on chilly winter days. But it’s having a critical impact on efforts to fill fuel storage amenities forward of the winter heating season.

“If we don’t succeed in filling gas storage by the autumn, we’re going to quickly start experiencing gas shortages,” mentioned Jörg Rothermel, head of power at Germany’s Chemical Industry Association. “And the Bundesnetzagentur [federal energy regulator] will have to start issuing orders for companies to reduce their gas consumption or even switch off some production facilities.”

 Additional reporting by David Sheppard and Joe Miller