Germany Risks Industrial Crash With Gas Shortage

Germany is facing an industrial crisis with many companies likely to end on the chopping block if Russian gas deliveries remain as low as they are now, Economy Minister Robert Habeck said today in an interview for Der Spiegel, as quoted by Reuters.

"Companies would have to stop production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills, that people would become poorer," Habeck said, blaming it all on Russia's President, who, according to the German minister, wanted to "undermine our liberal democracy from within."

Russia has reduced flows along the Nord Stream 1 pipeline by some 60 percent, citing the delayed delivery of a turbine that was repaired in Canada. The reason for the delay was fresh Canadian sanctions.

Earlier this week, Canada's Natural Resources Minister Jonathan Wilkinson acknowledged the problem but did not offer a solution, signaling that Canada had no intention of returning the turbine. 

Meanwhile, Gazprom could have increased flows along alternative routes to Europe but has refused to do so, giving substance to opinions that there is a political motive behind the reduction in gas flows to its biggest European client—and most ardent supporter of Ukraine.

Germany earlier this week triggered the second phase of its three-phase gas emergency plan, which is a step behind gas rationing, which will only happen in case of severe shortages. So far, it has not come to that, but the authorities in Berlin are worrying that they might need to stop exporting so there is enough for the domestic market.

Meanwhile, the Federal Network Agency of Germany, the national utility, telecoms, and transport regulator, predicted that if the current situation continued, consumers would see double or even triple energy bills, which have already added between 30 and 80 percent since last autumn.

The available scenarios for dealing with this situation, according to the agency's head, Klaus Mueller, "are not pretty and mean either too little gas at the end of winter or already very difficult situations in autumn or winter."

By Irina Slav for Oilprice.com

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