BERLIN — Germany could face a complete shutoff of Russian gas by the middle of July, Economy and Climate Minister Robert Habeck warned on Thursday — increasing worries that the country could be forced into a recession.
Speaking at a sustainability event in Munich, Habeck said that a “complete blockade” of the Nord Stream pipeline could start on July 11, when Gazprom said it plans to halt deliveries on the undersea Russia-to-Germany pipeline for routine maintenance.
Habeck, who triggered Germany’s second-highest gas shortage alert last week, suggested Russian President Vladimir Putin could use the excuse of a technical issue to keep the pipeline out of action. Eventually, the Russians could say: “We just can’t turn it on again, now we’ve found something during maintenance and that’s it,” he said. “So in that respect, the situation is definitely tense.”
Russia is already using similar excuses to squeeze deliveries.
Earlier this month, the Russian gas export monopoly announced a reduction in gas supplies through Nord Stream to 67 million cubic meters per day from 167 million cubic meters a day, blaming sanctions that it said are preventing it from getting equipment sent for repairs to Canada. Habeck has called that a “pretext” and said Germany was under “economic attack” from Russia.
Germany, and the rest of the bloc, is racing to fill up its gas storages ahead of the winter heating season — the EU wants them to be 80 percent full by November 1 — to ride out a Russian gas shutoff. However, that plan may not work if the Kremlin turns off the taps early.
A more severe disruption of Russia gas deliveries could prompt Habeck to declare a level three emergency, which calls for the government to step in and directly intervene in the gas market to secure supply for “protected customers,” such as private households, small businesses and hospitals — something that could come at the expense of large businesses accounting for 37 percent of gas consumption. Habeck last week suggested that Germany would face a shortfall of about 10 percent of gas consumption if there is a full shutoff.
“We would expect much of the burden to fall on the most energy- and gas-intensive companies which are primarily in the chemicals, base metals, refined metal products and glass sectors,” said an analysis from Capital Economics. The firm predicted that would cut German manufacturing output by 5 percent and GDP by about 1 percent.
“We are becoming increasingly concerned about the unfolding energy situation in Germany,” said George Saravelos, global head of FX research with Deutsche Bank, in a note to clients on Thursday.
German utilities are already feeling the crunch. The share price of Uniper fell by 18 percent on Thursday after it slashed its profit forecast and said it was in talks with the government over a bailout, blaming “great uncertainty over the geopolitical situation, and the duration and extent of the cut to Russia gas supplies.”
The news is having an impact on consumer sentiment, which worsened significantly amid soaring inflation and concerns over to how the country will make it through the winter.
Finance Minister Christian Lindner, a fiscal hawk and leader of the liberal Free Democrats, warned that darker days lie ahead. “There is a risk of a very serious economic crisis because of the sharp increase in energy prices, because of supply chain problems, because of inflation,” he said last week.
Using less, finding more
The shift in supply and demand is happening — although it’s unclear if it will happen fast enough to prevent Europe from freezing this winter.
The EU is scrambling to find alternatives to Russian gas. The bloc stuck a deal last week with Norway to boost deliveries, and Habeck has traveled to Qatar to get more liquefied natural gas. The U.S. has also promised to increase shipments to the EU.
On Thursday, Fatih Birol, head of the International Energy Agency, said: “Russia’s recent steep cuts in natural gas flows to the EU mean this is the 1st month in history in which the EU has imported more gas via LNG from the US than via pipeline from Russia.”
Habeck has been calling on people and businesses to cut their energy use. Klaus Müller, head of the German Network Agency, said on Tuesday that households must prepare for the winter, warning that “in three months, people won’t be able to pay their bills anymore.”
The German Association of Energy and Water Industries (BDEW) said Thursday that gas consumption in the country over the first five months of the year was 14.3 percent lower than the same period in 2021.
“It can be assumed that gas consumption has been declining primarily due to rising gas prices,” said BDEW head Kerstin Andreae. “But the economic gloom, appeals to save energy or personally motivated savings effects also play a role.”