Germany takes step towards gas rationing over payment stand-off with Russia

The German government has taken the first formal step towards gas rationing, adopting itself for a possible halt to shipments from Russia due to a dispute over payments.

Economy Minister Robert Habakkuk on Wednesday morning activated the “early warning phase” of an existing gas emergency law set up to deal with acute energy shortages.

The move was launched amid German fears that Russia could cut supplies to the country and its neighbors as they reject Moscow’s efforts to force payment for gas imports in rubles.

Russian officials said on Tuesday that Moscow would not “supply free gas” to Europe, a day after G7 countries unanimously rejected President Vladimir Putin’s decision. teaching Requires ruble payments.

During the early warning phase – the first of three phases in Germany’s emergency response – a crisis team from the Ministry of Economy, regulator and the private sector will monitor imports and storage.

If supplies fall, and less draconian attempts to reduce consumption fail, the government will cut off certain parts of German industry from the grid and give preferential treatment to households.

Walker Wieland, a professor of economics at the University of Frankfurt and a member of the German Economic Advisory Council, warned on Wednesday that halting Russian energy supplies would create a “substantial” risk of recession and bring Europe’s major economy closer to “doubling”. Digital inflation rates. ”

Even without disruptions to Russia’s gas supply, Germany’s inflation rate could reach 6.1% this year, economists advising the German government said. If energy imports from Russia are stopped, it will rise by 7.5 to 9 percent, the council said.

Dust, who is also deputy chancellor, told reporters in Berlin that the move was made in anticipation of Russian law, which conflicts with the value of long-term supply contracts in euros or dollars.

“We will not receive a [unilateral] Breach of contracts, “the dust reiterated on Wednesday morning.

The EU has set a target to fill gas storage sites to 80% of capacity by the end of September to ensure supplies to see its members through the winter. Germany’s gas storage facilities are currently 26.5% full, after reaching a 4-year low of 24.6% earlier this month, according to Gas Infrastructure Europe.

The dust stressed that for now the gas supply from Russia is flowing as usual.

However, as Germany tries to get rid of Russian gas and now imports more LNG, Russia’s market share in German imports has fallen from an average of 55 percent in recent years to 40 percent in recent weeks.

Last week Germany unveiled targets to quickly cut its dependence on Russian energy, vowing to exempt from the country’s gas by mid-2024 and be “almost independent” of its oil by the end of the current year.

The price of wholesale gas in Europe rose by 8% to 114.45 euros per megawatt hour in early trading on Wednesday.

Russia’s state-owned gas supplier Gazprom and the country’s central bank are due to report to Putin on Thursday on a mechanism to implement a currency exchange replacement payment for gas to the ruble.

Some Russian politicians have hinted that the deadline for a currency changeover may come as early as the end of the month, although the Kremlin has not officially announced when the change will take effect.

Also on Wednesday, Polish Prime Minister Mataus Morawiecki said his country plans to stop importing Russian oil by the end of the year and stop importing coal by the end of May, as part of the motive to get rid of Russian energy sources.

Poland currently derives about 70% of its energy from coal, most of which is mined locally, but it also imports large quantities of gas from Russia. In recent years it has been building infrastructure – including an LNG terminal on its Baltic coast and a gas pipeline from Norwegian gas fields – that will allow it to do without Russian gas when a long-term gas contract with Gazprom expires at the end of this year. .

Germany takes step towards gas rationing over payment stand-off with Russia Source link Germany takes step towards gas rationing over payment stand-off with Russia

Related Articles

Back to top button