Russia Cuts Gas Supplies to Germany, Warning for Europe

Germany claimed Russia was using energy as a weapon after Moscow cut natural gas supplies to retaliate for Europe’s sanctions over the war in Ukraine.

  • Moscow cuts German imports by about 3% due to Moscow’s decision
  • Germany’s Economy Minister says Germany can handle disruption

According to Robert Habeck, German Economy Minister, a unit of Gazprom was seized by Germany. Its deliveries were reduced by approximately 10 million cubic meters per day.

Although the move seems symbolic, it amounts to only 3% of Germany’s Russian gas imports according to Habeck. However, the Kremlin shows that it will not hesitate to squeeze its largest customer. The European benchmark gas price rose by more than 20%.

Habeck said to reporters that Russia’s actions were causing “the situation to escalate to the point where the use of energy to weaponize is becoming a reality.”

According to Kyiv, the German standoff was not the only reason why shipments to Europe via Ukraine were halted on Thursday. A key cross-border entry point had been closed down due to troop activity on the ground. Moscow’s counter-sanctions also targeted the pipeline crossing Poland, which removed a possible backup route for European gas customers.

This tension is just as a solution was emerging to what has been the biggest headache for weeks: Moscow’s demand for ruble payment for its gas. Uniper SE, a German giant, was growing more confident that they could continue to buy Russian supplies without violating sanctions.

Mario Draghi, the Italian Prime Minister, seemed to support such a move on Wednesday. More European buyers are opening ruble account accounts.

Germany has been trying to wean itself from Russian gas but it still holds 35% of its supplies. This is a decrease of more than half of what it had before the invasion by Ukraine in February. The country’s first floating liquefied natural gaz terminal will be the next step.

Habeck stated that Germany can deal with the disruptions in part by securing alternate supplies. He also said that Germany doesn’t need to raise its alert level to respond to Moscow’s Sanctions against Gazprom Deutschland GmbH. The country’s emergency plan currently at the first stage of its three-stage process could lead to its regulator having to ration gas in an eventuality.

The energy mix of Europe’s largest economy is dependent on fuel. Germany generates 15% of its electricity from gas, compared to less than 9% in 2000 as it reduces nuclear and coal use. Gas is essential for heating homes as well as industrial processes in the chemical and pharmaceutical industries.

Moscow banned Gazprom Germania’s dealings with it and its subsidiaries, which are now under the supervision of Germany’s energy regulator. This includes the energy supplier Wingas GmbH and its European gas storage business. It also includes EuRoPol Gaz’s trading arm based in London, Gazprom, and Gazprom’s Polish section of the Yamal Europe pipeline linking Russia and Germany.

Gazprom Germania was temporarily taken over by Germany last month. Many of the companies in the group were under pressure following refusals by clients and business partners to do business after Russia’s invasion. This raised the possibility that European owners of vital energy infrastructure might not survive.

He said that he was monitoring the situation closely and had spoken to lawmakers earlier on Thursday. “Energy can still be powerfully used in an economic conflict.”

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