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Germany warned residents and businesses on Thursday that the country was in a natural gas crisis that would worsen in coming months.
“The situation is serious, and winter will come,” Robert Habeck, Germany’s economy minister, told reporters at a news conference in Berlin. He said the federal government had triggered the second stage of its three-step energy gas plan; the subsequent stage would permit the federal government to start gas rationing.
“Even in case you don’t feel it yet: We’re in a gas crisis,” he said. “Gas is a scarce commodity to any extent further. Prices are already high, and we’ve got to be prepared for further increases. It will affect industrial production and change into an enormous burden for a lot of consumers.”
Last week, Russian’s state energy giant, Gazprom, reduced the quantity of natural gas it was delivering to Germany by 60 percent, in what seemed to be the newest move to punish Europe for sanctions and military support for Ukraine.
Gazprom has pinned blame for the reductions on a turbine for a compressor station that was sent to Canada for repairs and has not been returned due to sanctions. But Mr. Habeck called Gazprom’s cutbacks a deliberate economic attack by Russia’s president, Vladimir V. Putin.
“It is clearly Putin’s technique to create insecurity, drive up prices and divide us as a society,” he said.
The recent developments have created concerns that the gas crisis is gaining dangerous momentum that would have unexpected consequences for the broader economy, and that governments usually are not moving fast enough to stop it.
“We’re one step away from the rationing of gas across Europe, which might impact many sectors, businesses and consumers,” said Biraj Borkhataria, an analyst at RBC Capital Markets, an investment bank. “Policymakers appear to have found themselves unable to act quickly enough given the speed of events.”
Mr. Borkhataria said Russia’s actions in Germany could lead on to “contagion and knock-on effects” across Europe since the gas markets are connected. So, for instance, restrictions on flows to Germany are more likely to affect prices in Britain.
Russia can be inflicting financial damage on its corporate customers. One concern is that utilities which have contracts to purchase gas from Gazprom will find themselves wanting the fuel after which have to buy additional supplies at much higher prices to meet their obligations, resulting in losses.
“Resulting from the restrictions on the Nord Stream 1 pipeline, only significantly smaller quantities of gas are currently coming from Russia, and replacements can only be procured on the markets at very high prices,” said Klaus-Dieter Maubach, chief executive of Uniper, a German utility, in a press release. Uniper has said it’s receiving only 30 percent to 60 percent of its requested volumes.
The shortages have driven gas prices to extraordinarily high levels, about six times what they were a 12 months ago. Mr. Habeck warned that the such high prices were forcing energy providers to tackle losses, which could threaten the whole energy market.
“If this minus gets so big that they’ll’t carry it anymore, the entire market is in peril of collapsing sooner or later,” Mr. Habeck said, drawing a parallel to how the collapse of Lehman Brothers triggered the worldwide financial crisis.
Mr. Maubach welcomed the federal government’s emergency plan as a “viable instrument” for coping with the gas situation for now, but warned that more extensive measures can be needed “if the availability situation stays like this or becomes even worse.”
Since late March, when Germany entered the primary phase of its plan, the federal government has focused on increasing its gas storage, which is at greater than 58 percent of capability. But activating the second stage of the emergency plan means the federal government sees a high risk of long-term supply shortages.
The German government approved a 15 billion-euro, or $15.7 billion, line of credit on Wednesday for utilities to purchase natural gas to fill storage facilities. As well as, the federal government plans to begin a program that will help the gas system cope by encouraging firms to suspend their use of gas temporarily. The unused fuel would then be made available for other industrial users for the most affordable price.
But the federal government decided against allowing gas providers to pass on the soaring costs of energy to customers, after businesses pushed back against the measure.
German firms have been searching for alternative energy sources and ways to save lots of gas, and Mr. Habeck said that they had been capable of cut their use by around 8 percent in recent weeks. The federal government has also passed a law that will allow utilities to restart coal-fired power plants that either had been shuttered or were scheduled for phaseout. The Netherlands and Austria have taken similar measures.
Nord Stream 1, the fundamental pipeline supplying Russian gas to Germany, is scheduled for normal maintenance for about two weeks starting July 11, when flows will stop, raising concerns that Gazprom could make the most of the situation to halt deliveries for even longer.