Ukraine: Putin cuts off gas supply – also for Germany?

Poland and Bulgaria do not want to pay their bills in rubles, Russia turns off the tap. It is also a signal for Germany.

Russia announces the next stage in the spiral of sanctions and counter-sanctions and cuts off gas supplies to Poland and Bulgaria. No gas flowed through 8am Wednesday morning Yamal oil pipeline in Poland, explained Polish climate minister Anna Moskwa. In Sofia, people were outraged by the blocking of deliveries. The Bulgarian Ministry of Energy announced in a statement that its commitments have been “fully respected”. However, Russia sees it differently.

At the end of March, President Vladimir Putin signed a decree that Western countries should pay their energy imports in rubles in the future. It was a strategy used by Russia to circumvent sanctions. Because Russia’s high holdings of foreign currencies abroad have been frozen since the start of the war. The ruble exchange rate came under pressure for a short time before recovering recently. European states have refused payments in rubles beyond the Gazprom Bank – and referring to their existing contracts. “The payment of Russian gas deliveries takes place according to existing contracts in euros and dollars,” Chancellor Olaf Scholz (SPD) announced at the end of March after talks with Putin.

War in Ukraine – background and explanations of the conflict

Russian gas supplies: does Germany threaten bottlenecks?

Russia, on the other hand, had threatened to do so gas deliveries stop if payments continue to be made in the previous ways – and now it is implementing its threat. However, for now, the effects are expected to be limited, says energy economist Claudia Kemfert of the German Institute for Economic Research (DIW). “For months, less gas has been supplied through the Polish pipeline. There are currently no bottlenecks to expect, as Germany and Europe are sufficiently supplied with gas, “Kemfert told our editorial team.

According to the Polish climate minister Moskva, the Yamal pipeline is affected by the blockade of deliveries. The 4,196-kilometer-long pipeline transports natural gas from the Yamal Peninsula in Siberia via Russia, Belarus and Poland to Germany, where the gas is fed into the German long-distance gas network. However, they are significantly more important for Germany Nord Stream pipeline 1 And transga. Little gas has passed through the Yamal pipeline in recent months.

Also in Poland the damage should be limited. According to Minister Moskwa, the gas storage facilities are 76% full and the Baltic Pipeline, which transports gas from Norway to Poland, is also expected to be put into operation this year. The situation in Bulgaria is different. “Bulgaria is very dependent on Russian gas supplies and will need help through the European grid,” says Kemfert. However, the Bulgarian government has taken precautions to ensure that there are no short-term supply bottlenecks.

Germany: what would an embargo mean for Germany?

The effects on both sides are therefore initially minor: the gas supply to Europe is not significantly threatened, on the other hand Russia only minimally reduces its revenues. So it’s one thing above all: clear signal – also to Germany, the most important buyer of Russian gas. “A halt to Russia’s gas delivery has also become more likely for Germany. Germany must prepare and do everything possible to ensure security of supply,” warns Kemfert. Preparations for such a scenario have been underway for weeks. Also interesting: Energy embargo: why Russia could benefit from it

Federal Minister of Economics Robert Habeck (Greens) announced the first phase of the gas emergency plan. Although the state does not intervene in this early warning stage, it should do so in the third stage and then al emergency level come on, the state may actively determine which company still receives gas. German companies fear this scenario. Martin Brudermüller, head of the world’s largest chemical group BASF based in Ludwigshafen, had warned the “Frankfurter Allgemeine Sonntagszeitung” that “the whole economy” would be destroyed if there was an import ban. Eon’s boss Leonhard Birnbaum recently warned in the “Handelsblatt” that a gas embargo could “tear apart” the EU.

Germany, Economy Minister Robert Habeck (Greens) said Wednesday (April 27), will remain faithful to the contract and continue to pay in euros, as stipulated in the contracts. Stopping deliveries to European partners must be taken seriously, he said, “and I take it seriously too”. Gas supply shutdown Russia has also become more likely for Germany, “according to DIW expert Kemfert.” Germany must prepare and do everything possible to ensure security of supply. “However, Germany and Europe should not allow themselves to be blackmailed. but continue to insist on compliance with the treaty, he said.

How much would the German economy suffer?

In the spring economic forecasts of the Ministry of Economy, already reduced by 1.4 percentage points in the background of the war, a possible blockage of gas supplies has not yet been taken into account. “If that were to happen, we would have a recession in Germany,” Habeck said on Wednesday (April 27) when the forecast was presented. If deliveries fail now, that would mean up to 6.5 percentage points less growth according to his company’s calculations.

Even in the economy, such a scenario continues to be viewed with concern, despite all the preparatory measures: “An interruption in the gas supply would have almost no calculable effects economical progress of our country, “said Markus Jerger, president of the Federal Association of Small and Medium-sized Enterprises (BVMW), this editorial office.” Particularly small and medium-sized enterprises have almost no possibility of transferring their production quickly and flexibly . “Now it is important to create national reserves and expand renewable energy.

Gas: How could Germany compensate for a bottleneck?

However, Germany and Europe should not allow themselves to be blackmailed, but rather continue to insist on compliance with the treaty, Kemfert believes. The next stop of the gas supply from Russia to Poland and Bulgaria escalation level Russia “will put fear and panic in Europe.” At the same time, however, it also shows how dependent Russia is on ruble payments. For Germany, it is about buying more gas from other countries and preparing for the winter with energy savings.

The federal government is also working on this. Federal Minister of Economy Habeck recently traveled to Qatar and the United Arab Emirates, among other places, to negotiate the delivery of liquid gas. New liquid gas terminals are now to be built in Germany at breakneck speed, after projects haven’t been going on for years. In addition to the federal government, they have also recently called in interest groups Save energy up. The ADAC Automobile Club also advised to leave the car for short distances.

However, this will not be enough to reduce dependence on Russian gas in the short term. While Germany al Money almost independent of Russia and, according to Habeck, only about 12% dependent on oil, it is much more difficult for Germany to break away from Russian gas. In the first quarter of 2022, 40% of German gas imports still came from Russia. Habeck does not expect Germany to be completely independent of Russian gas until 2024 at the earliest.

How full are German gas storage facilities?

With the warmer climate most of the gas currently delivered to Germany flows into the gas storage facility and levels have been rising since mid-March. According to the Federal Network Agency, they are currently about 34% full. The duration of this gas in an emergency depends on various factors, including time.

After storage tanks had historically low fill levels sometime last winter, they need to be refilled next winter winter be much better filled. A new storage law mandates fill levels of 90 percent by 1 December. Timm Kehler, member of the board of directors of the Zukunft Gas industry association, spoke out in favor of accelerating compilation in the short term. “We have to save gas now in order to have enough in the winter.”

Do private families have to deal with restrictions?

According to the law, private homes, as well as hospitals or firefighters, are among the so-called “protected customers”, where the gas is turned off last in the event of supply bottlenecks. But they will probably still feel the tense situation, experts expect further price hikes. The federal government calls for energy savings.

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