Germany says it's taking Russian gas-halt threat seriously

Russian gas giant Gazprom's German subsidiary Gazprom Germania headquarters in Berlin on April 5, 2022. PHOTO: AFP

BERLIN (BLOOMBERG) - Germany is taking Russia's threat to halt gas supplies seriously after the country stopped deliveries to Poland and Bulgaria over disputed payment terms.

"Russia is showing that it's ready to get serious," Economy Minister Robert Habeck said on Wednesday (April 27) in Berlin.

"They're ready to put a stop to gas deliveries. We have to take that seriously, and that also goes for other European countries."

A sudden halt of Russian gas, which still accounts for 35 per cent of German gas supplies, would trigger a recession for Europe's largest economy, he said.

He earlier announced his ministry had slashed the growth forecast for this year to 2.2 per cent from a prediction of 3.6 per cent in January due to spillover from Russia's invasion of Ukraine.

Despite the concern, Germany is sticking to guidance that gas should be paid in euros or dollars, with Gazprombank PJSC converting the funds into roubles, he said.

It remains to be seen how the Kremlin reacts, he added.

Paying euros and dollars is "the way Europe has outlined and that's the way that's compatible with sanctions", Mr Habeck said.

"My understanding is that German companies are thereby compliant with contracts. We will have to wait and see whether that's also Gazprom's understanding."

While the government is seeking to rapidly reduce exposure to Russian gas, cutting reliance completely depends on how quickly Germany can build the necessary infrastructure such as liquified natural gas terminals and pipelines.

Asked if it was possible that Russian gas imports could be halted already next year, he said: "No, of course, that's not realistic, but we have to nonetheless attempt the unrealistic."

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