Germany has the second phase of its on Thursday three-stage gas emergency programby taking a step closer to rationing supplies to industry – a move that would deal a severe blow to the manufacturing heart of its economy.
“Gas is now scarce in Germany,” said Economics Minister Robert Habeck at a press conference in Berlin. “Even if you don’t feel it yet: We are stuck in a gas crisis.”
Europe’s energy crisis escalated this month as Russia further cut supplies to Germany, Italy and other European Union members.
Russia’s state-owned gas company Gazprom cut flows through the Nord Stream 1 pipeline to Germany by 60% last week, blaming the West’s decision to hold vital turbines on hold because of sanctions. Italian energy giant ENI said Gazprom is cutting supplies by 15%.
Twelve EU countries have so far been hit by Russian gas supply cuts, Frans Timmermans, the bloc’s climate policy chief, said on Thursday.
“Russia has armed energy and we have seen more gas disruptions announced in recent days. All of this is part of Russia’s strategy to undermine our unity,” Timmermans told EU lawmakers.
“So the risk of a full gas disruption is now more real than ever,” he said.
Habeck urged Germans to reduce their consumption as part of a national effort to prepare for the “coming winter months”.
The federal government’s decision to raise the level to “alert” follows cuts in Russian supplies since June 14 and the persistently high market price of gas, he added.
European natural gas futures prices are up about 60% since the middle of this month to about €133 ($140) per megawatt-hour (MWh), a level last seen in March, according to Intercontinental Exchange data.
Habeck said while Germany’s gas storage facilities are 58% full – higher than at this point last year – the target of reaching 90% by December will not be achievable without further action.
“We are in an economic dispute with Russia,” said Habeck.
Gazprom’s latest gas flow cut comes after it had already halted supplies to Poland, Bulgaria and Finland, as well as energy companies in Denmark, Germany and the Netherlands, because they refused to comply with the Kremlin’s demand to pay in rubles.
Germany, Austria and other EU countries are now turning to coal and oil-fired power plants so that more gas can be stored to heat homes in the winter.
Europe has been trying to reduce its reliance on Russian natural gas since invading Ukraine in late February. Germany has managed to reduce Moscow’s share of its imports from 55% before the war to 35%.
But its ability to find alternative supplies took a hit last week when a major US producer of liquefied natural gas said its Texas facility would shut down entirely for 90 days after a fire broke out. Freeport LNG has produced about a fifth of US LNG exports so far this year, according to analytics firm Vortexa.
Germany already activated the first “early warning phase” of its energy emergency program in March. The “alert” phase declared on Thursday would be followed by an “emergency” if the situation worsened. In this state of high alert, regulators can ration gas to keep supplies going to “protected customers” like homes and hospitals. Industrial users would be the first to face cuts.
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