Germany Prepping to Forgo Russian Gas

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Germany
Courtesy of Heinrich-Böll-Stiftung (Flickr CC0)

Germany is prepping for Russia’s plan to cut off gas supplies after suspending all deliveries to Poland and Bulgaria. Gazprom blamed those countries’ decision to snub its directive to be paid in roubles rather than euros. Major German and Austrian distributors scrambled to sign up to Russia’s terms, evidence of who has the upper hand, but Europe’s susceptibility owes much to economics and politics.

Neither Poland nor Bulgaria is unlikely to go into immediate crisis, despite relying on Russia for their gas. Bulgaria’s gas reserves are presently equal to three weeks of Russian imports, while Poland’s supply is only enough for three months, according to the data analysis of New Statesman from Entsog and E.U. regulators G.I.E.

Bulgaria will probably depend on Azerbaijan gas, which started flowing last year, and its arrangement with Greece’s exclusive L.N.G. terminal. Since April, that terminal has been running at just 15% of its technological capability. Were it to maximize its output, it would make up for Bulgaria’s lost Russian gas two folds.

Poland will be tighter, despite having access to Lithuania since May 1. Those two terminals can only raise 23% production, about a quarter of Poland’s gas formerly acquired from Russia. Until a gas pipeline to Norway is operational in October, Poland might count on its E.U. neighbors’ generosity.

Germany
Courtesy of Askii (Flickr CC0)

Hungary and Slovakia, dependent on Russian gas, quickly signal their readiness to settle in roubles.

German Chancellor, Olaf Scholz, said his country’s energy industry stressed that its gas supply is sufficient. The economy minister is trying to secure gas from other countries, resulting in a one-third reduction of gas from Russia.

Earlier this year, the German government reviewed the process that could require gas rationing. Should Russia stop gas flows to Germany, the situation could be critical.

Germany relied on Russia to meet 55% of its natural gas needs at the outset of the war. Since Moscow invaded Ukraine on Feb 24, 2022, the country has reduced that amount to 35% by importing liquefied natural gas from other countries.

German officials said they hope to draw a third of its gas from Russia by the end of the year. Approximately half of all German homes use natural gas for heating. Rationing will prioritize hospitals and private homes during shortages if rationing becomes necessary.

The German government has also concentrated on replenishing natural gas repository facilities which are nearly empty as winter comes to an end. However, the facilities are slowly and steadily filling to ensure they are at 90% capacity by December 1.

German economy minister Robert Habeck has also been looking for other suppliers for oil and coal. Fossil energy is as vital to the country’s energy supply as gas, with 35% of oil and 25% of coal coming from Russian fields at the start of this year. German economists calculate that a premature suspension of Russian gas would cost the country 400,000 jobs and launch the country into a more terrible slump than the pandemic.

Written by Janet Grace Ortigas

Sources

The New York Times: Germany is preparing to forgo Russian gas. But a quick cutoff would hurt; by Melissa Eddy
New Statesman: Putin thinks he’s called Europe’s bluff – and he may be right; by Ben van der Merwe
Economist: Can Germany cope without Russian gas?

Featured and Top Image Courtesy of Heinrich-Böll-Stiftung’s Flickr Page – Creative Commons License
Inset Image Courtesy of Askii’s Flickr Page – Creative Commons License

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