Will Russia finally turn off the gas tap for Germany with Nord Stream 1? An end to the Russian energy supply would have dramatic consequences. But how could the problem be solved?
The Nord Stream 2 pipeline was Germany’s leverage to defeat Putin in the Ukraine war. The traffic light government shut down the billion-dollar project because Russia recognized the Donbass regions of Luhansk and Donetsk as independent “people’s republics” – two days before Russian troops invaded Ukraine. Now there is a military war in the country and a hunger and energy war worldwide.
Germany and all of Western Europe are particularly involved in the latter. For a short time, Putin made the “weapons” of the West his own and plunged numerous countries into a gas crisis. His latest leverage: the Nord Stream 1 Baltic Sea pipeline. The pipe is currently undergoing regular maintenance. But the annual routine process could now become a problem. The German government and the Federal Network Agency fear that the pipeline will remain empty even after the expected ten to 14 days of maintenance.
Significantly less gas has been flowing through the pipeline to the west for four weeks now. The energy company Gazprom had reduced deliveries to 40 percent.
Substitute for gas from Nord Stream 1
However, Germany has prepared for the impending failure and increased its gas imports from other countries, said Andreas Schröder, Head of Energy Analytics at market analyst Icis. The delivery capacity from the Netherlands has recently been increased from a good 30 to 60 million cubic meters per day. Norway delivered 130 million cubic meters of gas to Germany last Thursday instead of the usual 100 million. However, the additional deliveries from other countries could hardly compensate for the missing Russian deliveries. Then Germany would have to fall back on its reserves.
The market researcher estimates that if the pipeline is up and running again after ten days, Germany could still achieve its reserve targets of 65 percent by August 1 and 80 percent by October. It is unlikely that the maintenance will affect gas prices in the short term. But “the market would react immediately to any change to our disadvantage,” says Schröder.
Whether Russia will send gas through the pipes again after the pipeline maintenance work will probably only become apparent on July 21, after the maintenance work has ended. However, industry representatives consider an energy supply freeze to be unlikely. Politicians warn anyway. “We are facing dramatic months,” said SPD party leader Lars Klingbeil recently on the RTL / ntv program “Frühstart” and joined the appeal by Federal Minister of Economics Robert Habeck. Germany must save gas – also in the private sector. Rationalizing gas for industry would have dramatic consequences for the job market, Klingbeil warned.
Delivery stop means unemployment and short-time work
This is also confirmed by a research group in a . Based on two scenarios, the scientistscalculated by the German Institute for Economic Research and the Leibniz Institute for Economic Research Halle, among others, what consequences a Russian oil and gas supply freeze could have for Germany. If Russia stopped supplying energy to Germany, industry would have to cut back production. The result would be a slump in production that would set in in 2023. According to the team of experts, this would only be short-lived, but the consequences for the labor market would be devastating.
This could especially be felt by people looking for a job. The researchers expect that new workers will be less in demand from companies. According to the calculations, the unemployment rate would rise from almost five to six percent in 2023. However, the experts are not assuming that there will be a wave of layoffs. It is likely that more employees will be sent on short-time work again. According to the forecast, there could be 725,000 employees per month – far fewer than in the first year of the corona pandemic. At that time the number was still 1.2 million. This also has consequences for wages. They are “temporarily depressed by the massive expansion of short-time work,” the researchers write. By how much, the industry experts left open.
What alternatives does Germany have?
Federal Minister of Economics Robert Habeck has therefore been working for months to cushion the consequences of the gas crisis. The Greens even threw their climate principles overboard and agreed to the promotion of energy resources in the North Sea. Gas is being dug in front of Borkum, while the Wintershall Dea group is now allowed to expand its oil production project in front of Schleswig-Holstein. But both will hardly be enough to cover the energy needs of the Federal Republic – neither in the short nor in the long term. Even the much-vaunted liquefied gas from overseas will not solve the gas problems in Germany in the short term. The first two provisional LNG terminals in Brunsbüttel and Wilhelmshaven should be ready by the turn of the year.
Another option would be environmentally harmful fracking. The method would be ideal in North Rhine-Westphalia and Lower Saxony, but also in Baden-Württemberg. that is underground and could meet current needs for over 25 years. But here the time problem is possibly even greater than, for example, with liquid gas. Approval procedures and test drilling would take years. In addition, companies would have to invest billions in a method that they could only practice until 2045. Then Germany wants to be climate neutral. It is unclear whether this is economically viable for the company.
In order to get the gas problem under control in the short term, Germany probably only has one realistic choice. And that consists of saving gas – drastically. In a recently published study by the Bruegl think tank, the researchers came to the conclusion that a Russian energy supply freeze would not affect all European countries equally. Countries like Portugal, Spain and France are largely isolated from the European gas network. A large part of the LNG terminals are located on the Iberian Peninsula. The liquid gas lands there the fastest, which is why these countries would not have to reduce in the event of a delivery stop, as the study states.
The situation is different in inland European countries such as the Czech Republic, Austria or Slovakia. They have no LNG terminals and are more closely connected to the European gas network – and are therefore dependent on Russia. The same applies to Germany. If Russia shuts down its energy supplies completely, Germany could have used up its gas reserves by January 2023, the scientists have calculated. In order to survive the winter months reasonably warm, Germany would have to reduce its consumption by 29 percent now. Germany can get gas from Norway, the Netherlands and Belgium. However, Germany plays an important role as a transit country, so the conclusion. Because both the eastern and southern neighbors, such as Poland, Austria and Italy, as well as the Baltic States are dependent on gas supplies via Germany.
Russia announces further deliveries, Germany remains skeptical
It is not yet entirely clear how Russia will react after the maintenance work. However, there were already indications from Moscow that the gas could flow again under one condition. And that is if Canada provides a working gas turbine. According to Gazprom, gas supplies had been curtailed due to the lack of a turbine. Canada now wants to hand them over to Germany. Kremlin spokesman Dmitry Peskov announced from Moscow that the gas deliveries would continue as soon as the repaired gas turbine arrived back in Russia. “If the turbine comes after the repair, then that allows for an increase in volume,” Peskov said, according to the Interfax agency.
Meanwhile, the President of the Federal Network Agency remains skeptical. It is unclear how Russia will behave after the ten-day period. There are “very different signals” from Moscow, including very “martial announcements,” he said in ZDF’s “Morgenmagazin”. “Honestly nobody knows.” If there are no deliveries from Russia at all, Germany must prepare for a gas emergency. He called on the population to save gas. “If 40 million people did that, then we would also have a significant effect on Germany.”
Sources:“”, , “”, “”, with material from DPA and AFP
Source: Stern
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