The flow of natural gas from Russia to Germany via a crucial undersea pipeline stopped on Monday, as the link went offline for a 10-day scheduled maintenance period, testing Europe’s resolve to wean itself off abundant Russian fuel supplies.
Despite sanctions aimed at punishing Moscow for invading Ukraine, Germany still draws 30 percent of its natural gas from Russia, much of it used to power its economically important industrial sector. Other European Union countries, including Austria, Italy and the Czech Republic, also receive gas via the Nord Stream 1 pipeline.
The pipeline’s majority owner, the Russian energy giant Gazprom, cut the flow of gas by 60 percent last month, driving energy prices to record levels. The move has forced Germany to raise its gas emergency alert level to the second of three stages — the third and final stage would permit the government to begin gas rationing — and pass a law to bail out utility companies and bring coal-fired power plants back on-line.
Officials in Berlin now worry that Gazprom could take advantage of the routine shutdown to cut off supply altogether, stymieing Germany’s plans to fill the country’s gas storage reserves by November to bolster supplies for the winter. Facilities across the country are just above 63 percent full, but if Russia turns off all supply beyond the 10-day maintenance period, that target could become unreachable.
“It’s simply a situation like we haven’t had before,” Robert Habeck, Germany’s economy minister, told German public radio Deutschlandfunk on Monday. “We honestly always have to prepare for the worst and work a little bit for the best.”
The Russia-Ukraine War and the Global Economy
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A far reaching conflict. Russia’s invasion of Ukraine has had a ripple effect across the globe, adding to the stock market’s woes. The conflict has caused dizzying spikes in gas prices and product shortages, and has pushed Europe to reconsider its reliance on Russian energy sources.
Russia’s economy faces slowdown. Though pro-Ukraine countries continue to adopt sanctions against the Kremlin in response to its aggression, the Russian economy has avoided a crippling collapse for now thanks to capital controls and interest rate increases. But Russia’s central bank chief warned that the country is likely to face a steep economic downturn as its inventory of imported goods and parts runs low.
Trade barriers go up. The invasion of Ukraine has also unleashed a wave of protectionism as governments, desperate to secure goods for their citizens amid shortages and rising prices, erect new barriers to stop exports. But the restrictions are making the products more expensive and even harder to come by.
Prices of essential metals soar. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Chancellor Olaf Scholz convened the heads of big German companies in Berlin on Monday to discuss the impact that the war in Ukraine and the economic sanctions against Russia is having on their businesses. Industry leaders are faced with high energy prices and growing uncertainty while struggling to emerge from disruptions caused by pandemic shutdowns and supply chain snarls. Economists are predicting that a full gas cutoff could tip Germany, Europe’s largest economy, into a recession.
Over the weekend, Mr. Habeck reached an agreement with Canada for a turbine needed for the Nord Stream 1 pipeline that had been sent to Montreal for repairs to be returned to Germany. The turbine’s return had been held up by sanctions against Russia, and Gazprom had cited the missing equipment as the reason it was forced to reduce supplies through the pipeline.
Even as Germans are flocking to the beaches and mountains for their summer vacations, the economy ministry is calling on them to begin servicing their furnaces, installing water-saving shower heads and preparing to lower their heating by at least one degree in the coming winter to save energy.
Analysts at the Brussels think tank Bruegel predict that Germany would need to cut its consumption of natural gas by 29 percent to prevent storage from running dry if Russian gas was permanently cut off.
“Meeting winter gas demand solely based on non-Russian supplies (even with full storage) will only work if consumption is substantially lower than in previous years,” Georg Zachmann, a senior fellow in climate and energy at Bruegel, wrote on Twitter.
Cities and towns across Germany are also considering how to save energy when the temperature begins to drop. Officials in Berlin are looking at whether to reduce lighting at some tourist attractions in the capital, and the country’s Parliament has decided to lower the temperature in its offices by two degrees when the heating period begins. Many heated public swimming pools have also reduced their temperatures.
How dire the situation could become will be evident only toward the end of the month, when Nord Stream 1 is scheduled to come back online after July 21.
“What happens at the end of the maintenance, nobody is able to say at this moment,” Klaus Müller, the head of Germany’s energy network authority, told Reuters. “We won’t know any time sooner than a day before its scheduled end.”
