Germany announces a gas crisis and Russia cuts supplies to Europe

Today, Thursday, Germany activated the second phase of its work Three-stage gas emergency programbringing it closer to rationing supplies to industry – a move that would deal a major blow to the manufacturing heart of its economy.

German Economy Minister Robert Habeck has said he hopes rationing will not be necessary over the coming winter, but he cannot rule it out.

“There is a shortage of gas in Germany from now on. Even if you don’t feel it yet: we are in a gas crisis,” he told reporters at a press conference in Berlin.

Europe’s energy crisis escalated this month as Russia cut supplies to Germany, Italy and other members of the European Union.

Russia’s state-owned gas company Gazprom cut flows through its Nord Stream 1 pipeline to Germany last week by 60%, blaming the move on the West’s decision to block vital turbines due to sanctions. Italian energy giant Eni said Gazprom had cut its supplies by 15%.

Russia has reduced the volume of gas flowing through the Nord Stream 1 pipeline on the Baltic Sea to Germany.

The bloc’s climate policy official, Frans Timmermans, said on Thursday that 12 EU countries had so far been affected by Russian gas supply cuts.

“Russia has turned energy into weapons, and we have seen more gas disruptions that have been announced in recent days. This is all part of Russia’s strategy to undermine our unity,” Timmermans told EU lawmakers.

He stressed that “the risk of a complete gas outage is now more realistic than ever.”

Kremlin spokesman Dmitry Peskov said Thursday that the cuts in Russian gas supplies to Europe were the result of technical issues rather than political ones, adding that “there is no hidden agenda.”

economic confrontation

Habek called on all consumers – industry, families and public institutions – to reduce their consumption as much as possible “so that we can get through the winter”.

Prices of natural gas futures in Europe are up nearly 60% since the middle of this month to trade around 133 euros ($140) per megawatt-hour, levels last seen in March, according to data from Intercontinental Exchange.

Habeck said that while German gas storage facilities are 58% full – higher than they were at this time last year – the target of reaching 90% by December would not be met without further action.

“We are in an economic confrontation with Russia,” Habek said.

Gazprom’s latest throttling of gas flows comes after it has already cut supplies to Poland, Bulgaria, Finland and energy companies in Denmark, Germany and the Netherlands, due to its refusal to comply with the Kremlin’s demand to pay them in rubles.

Turn to coal

Germany, Austria and other EU countries are now turn into charcoal and oil-fired power stations so that more gas can be diverted to storage to heat homes during the winter.

Europe has tried to reduce its dependence on Russian natural gas since the invasion of Ukraine in late February. Germany managed to reduce Moscow’s share of its imports to 35% from 55% before the start of the war.

But its options to find alternative supplies took a hit last week when a major US LNG producer said its facility in Texas would shut down completely for 90 days after a fire. Freeport LNG has produced about a fifth of US LNG exports so far this year, according to analytics firm Vortexa.

Germany activated the first “early warning” phase of its emergency energy program in March. On Thursday, he announced that the “alert” phase would be followed by an “emergency” if the situation deteriorated further. On this high alert, regulators could ration gas to conserve supplies to “protected customers” such as homes and hospitals. Industrial users will be the first to face the cuts.

Anna Cuban, Sharon Braithwaite, James Frater, Anna Chernova, and Benjamin Brown contributed to this article.