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    Berlin says Russia is mounting "economic attack": press

Summary

Comments from German economy minister come as a survey indicates German economic output has stalled.

by: Callum Cyrus

Posted in:

Complimentary, Natural Gas & LNG News, Europe, Liquefied Natural Gas (LNG), Political, News By Country, Germany

Berlin says Russia is mounting "economic attack": press

German economy minister Robert Habeck believes the sharp fall in gas flows to western Europe are nothing short of an "economic attack" by the Kremlin, Reuters reported June 23.

The reduced gas deliveries have sparked fears Germany could enter recession if Russian supplies completely ceased, Reuters said. A survey published June 23 indicates the economy has already lost momentum in the second quarter, it added.

Germany earlier today triggered the "alarm stage" of its emergency gas system. Gazprom has continued to deliver less gas than requested over the course of this week, officially blaming the shortfalls on technical issues at the Nord Stream pipeline from Russia to Germany. A total of 12 EU countries have been affected by the Nord Stream maintenance, according to the BBC.

Further troubles are likely to arise as Gazprom plans to take Nord Stream 1 off for planned maintenance from July 11 to 21. Gazprom has already ceased gas exports to Poland, Bulgaria, the Netherlands, Denmark and Finland, after all five countries failed to comply with its ruble-only payments mechanism.

Berlin's move is regarded as largely symbolic as it will not trigger policy actions in the energy domain, unlike the second stage of Italy's gas emergency structure. But it is seen as a signal that major supply problems are on the horizon. The first stage of the emergency supply plan instructed gas utilities to stockpile enough supplies in case of disruption to usual channels. Under the final stage of the plan, Berlin would intervene in markets and ration gas to customers. Gas rationing could affect Germany's industrial and manufacturing powerhouse, which could face operational challenges if Gazprom suddenly turns the taps off.

NGW could not ascertain the size of the shortfall in Russian gas exports to Germany.  Nord Stream 1 transit volumes are running as much as 60% lower than average, due to a turnaround at one of the compressor stations.

France and Italy have also reported reductions in Russian flow, sparking speculation western European countries could enlist coal as a temporary stop-gap to protect energy security, with such measures under consideration in the Netherlands, Germany and Austria. Those proposals have been slammed by European Commission president Ursula von der Leyen, who has urged member states to avoid "backsliding" on the EU's net zero commitments.