Germany risks recession as Russia’s gas crisis worsens


Berlin / Copenhagen — Germany has already joined the growing list of European countries developing emergency plans to deal with the growing energy supply crisis, so Germany is already constant if Russia’s gas supply is completely stagnant. Industry groups warned on Tuesday that they are facing a recession.

European Union countries from the Baltic Sea in the north to the Adriatic Sea in the south outline measures to deal with the supply crisis after Russia’s invasion of Ukraine.

The EU relied on Russia for 40% of its prewar gas demand, rising to 55% in Germany, leaving a big gap to fill the already tight global gas market. Some states have temporarily overturned plans to close coal-fired power plants accordingly.

Global gasoline prices have skyrocketed, further boosting inflation and causing major headaches for policy makers seeking to recover Europe from the economic crisis.

The German BDI Industry Association lowered its 2022 economic growth forecast on Tuesday to 1.5%, down from 3.5% before the war. It said Russia’s gas outage would inevitably lead to a recession.

Russian gas is still being pumped via Ukraine, but at a slower rate, the Nord Stream 1 pipeline under the Baltic Sea, an important supply route to Germany, operates at only 40% capacity. I am. This is because Western sanctions are preventing repairs. Europe says this is an excuse to reduce the flow.

Germany, like Denmark, Austria, the Netherlands and Italy, has begun the first early warning phase of a three-stage plan to address the gas supply crisis.

As part of its emergency response plan, German gas regulator Bundesnetzagentur is launching a new auction within a few weeks to encourage manufacturers, especially those who use gas in high-temperature processes, to reduce consumption. We announced the details of the system.

Competition to replenish inventory

But regulators said it wasn’t time to declare a full-scale emergency, or the third phase of its crisis plan, to provide the industry with national ration gas to protect critical services and homes. ..

“I am very much in favor of carefully investigating when the right time will be at the highest alert level,” Bundesnetzagentur chief Klaus Mueller told German broadcaster BR.

Europe is competing to replenish gas storage facilities that are currently about 55% full, achieving the EU’s overall target of 80% by October and 90% by November. This caused the supply to slow down or stop further.

However, the decline in Nord Stream 1 pipeline flow and the turmoil in the major US producers of liquefied natural gas that provided shipments to Europe make it difficult to reach these goals.

Benchmark gas prices in Europe traded on Tuesday at around € 123 ($ 130) per megawatt hour (MWh), below this year’s peak of € 335, but still rising by more than 300% at the level a year ago. did.

European highs have attracted more LNG cargo, while the global LNG market is already expanding, while European countries lack the infrastructure to meet all the needs from LNG.

Europe is also seeking more pipeline supply from its own producers such as Norway and other states such as Azerbaijan.

Despite being a small gas user, Sweden began the first phase of its energy crisis program on Tuesday in collaboration with others.

The state’s Energy Agency said supply remained strong, but the move was “potentially tense gas markets and worsening gas supply conditions for industry players and gas consumers connected to West Sweden’s gas network. I showed that I had sex. “

Sweden, where gas accounted for only 3% of energy consumption in 2020, relies on a pipe gas supply from Denmark, where storage facilities are now 75% full. Denmark began the first phase of its emergency program on Monday.

Rachel More and Stein Jacobsen