War in Ukraine

Germany raises alert as Russia's gas cuts affect EU countries

BERLIN • Germany triggered the "alarm stage" of its emergency gas plan yesterday in response to falling Russian supplies, but stopped short of letting utilities pass on soaring energy costs to customers in Europe's largest economy.

The measure is the latest escalation in a stand-off between the European Union and Moscow since the Russian invasion of Ukraine that has exposed the bloc's dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.

The German move came as the EU's climate policy chief said that member countries have been affected by Russia's gas cuts. Mr Frans Timmermans said 10 of the EU's 27 member countries have issued an "early warning" on gas supply - the first and least severe of three levels of crisis identified in the bloc's security of energy supply regulations.

EU countries are required to have plans in place for how they would manage a supply disruption at the three levels.

Germany's decision is largely symbolic as a way of signalling to companies and households that painful cuts are on the way. But it marks a major shift for Berlin, which has cultivated strong energy ties with Moscow stretching back to the Cold War.

Lower gas flows sparked warnings earlier this week that Germany could fall into recession if Russian supplies were halted altogether. S&P Global's flash Purchasing Managers' Index yesterday showed the economy losing momentum in the second quarter.

"We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin," Economy Minister Robert Habeck said.

Russia supplies the EU with about a quarter of its oil imports and 40 per cent of its gas imports. Germany itself buys around 25 per cent of its oil and 40 per cent of its gas from Russia.

Moscow has denied the gas supply reductions were premeditated, with state supplier Gazprom blaming a delay in the return of serviced equipment caused by Western sanctions. The Kremlin said yesterday that Russia remained a reliable energy supplier and "strictly fulfils all its obligations" to Europe.

But the head of the International Energy Agency (IEA) said on Wednesday that Russia may cut off gas to Europe entirely to bolster its political leverage ahead of higher-demand winter months. "This is the reason Europe needs contingency plans," the IEA's Mr Fatih Birol said.

Russian gas flows to Europe via Nord Stream 1 and through Ukraine were stable yesterday, while reverse flows on the Yamal pipeline edged up, operator data showed.

Several European countries have outlined measures to withstand a supply squeeze and avert winter energy shortages and an inflation spike that could test the continent's resolve to maintain sanctions on Russia.

The supply cuts have also driven German companies to contemplate painful production cuts and resort to polluting forms of energy previously considered unthinkable as they adjust to the prospect of running out of Russian gas. The EU on Wednesday signalled that it would temporarily turn to coal to plug energy shortfalls.

REUTERS

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A version of this article appeared in the print edition of The Straits Times on June 24, 2022, with the headline Germany raises alert as Russia's gas cuts affect EU countries. Subscribe