Pipeline uncertainty leaves Germany with energy jitters

The Nord Stream pipeline, which supplies Germany with most of its Russian gas, will be shut down for routine maintenance from Monday - with fears rising that it may remain off for good.

Germany is already feeling the effects of the energy squeeze caused by the war in Ukraine, with many households and businesses turning down the thermostat or dimming the lights.

Economy Minister Robert Habeck has even made headlines for extolling the virtues of shorter, colder showers.

Now, nervousness abounds as the scheduled 10-day pause in deliveries via the vital Nord Stream pipeline threatens to make things even worse.

"No scenario can be ruled out," Habeck has warned.

Confronted with the risk that supplies may never return to previous levels, many businesses and local authorities have come up with contingency plans.

"It is possible that we will return to working from home, as we did during the pandemic - but this time to save energy in the national interest," Carsten Knobel, head of consumer chemicals group Henkel, told local media.

The VCI, a trade group representing the heavily gas-dependent German chemicals industry, has said it is preparing for "the worst-case scenario".

Chemicals giant BASF, meanwhile, has raised the possibility of putting its employees on furlough, a system already used during the coronavirus pandemic from 2020.

Perfume producer Symrise is falling back on an oil-powered furnace at its factory in Holzminden.

Russia has already cut supplies via the Nord Stream pipeline by 60 per cent in recent weeks, citing technical issues - which Berlin dismisses as cover for a "political" decision.

As a result, Germany's gas storage facilities are being filled at a slower pace than usual, leaving the country at risk of running into a "gas shortage", according to Habeck.

"If we stop receiving gas from Russia... the quantities currently stored will only be sufficient for one or two months," said Klaus Mueller, president of the Federal Network Agency.

Consumers "will be shocked when they receive a letter from their energy supplier" with a bill some three times higher than usual, Mueller said.

On Thursday, Germany's lower house of parliament or Bundestag passed a plan to turn off the hot water in its offices and keep the air temperature no higher than 20 degrees Celsius in the winter.

Several local authorities have also put energy-saving plans in motion.

The Bavarian city of Augsburg has turned off its fountains, dimmed the facades of public buildings at night and is debating switching off some under-used traffic lights.

A housing cooperative in the eastern city of Dresden made national headlines when it announced it would limit hot water to certain times of day.

And Vonovia, Germany's largest property group, said on Thursday it plans to limit the temperature in its 350,000 homes to 17 degrees Celsius at night.

Since the outbreak of the war in Ukraine, Germany has managed to reduce the share of its natural gas supplied by Russia from 55 per cent to around 35 per cent.

The country relies on gas for more than 50 per cent of its heating needs.

In a bid to further reduce its reliance on Russian gas, Germany has put aside billions of euros to buy liquefied natural gas from other producers such as Qatar or the United States.

But in the event of a total supply cut-off from Russia, the country "will have to make very difficult societal choices," according to Habeck.

The end of Russian gas deliveries would most likely plunge the country into a painful recession, with the economy shrinking by 6.5 per cent between 2022 and 2023, according to a recent forecast by the country's top economic think tanks.

Already, the surge in energy prices created the first monthly trade deficit in the country in three decades in June, perhaps the first tremor of a bigger upheaval to come. REUTERS



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