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Energy crisis: What will happen if Russia closes the gas “tap” – Why Germany sounded the alarm

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An alarm has sounded across Europe as Putin's ultimatum on paying for gas in rubles expires tomorrow.

The Minister of Environment and Energy, Costas Skrekas, convenes an extraordinary meeting of the crisis management team, today, Wednesday, March 30 at 17:00, as tomorrow, March 31, expires the ultimatum of the Russian Federation for the payment of contracts for the supply of natural gas in rubles. The purpose of the meeting is to evaluate alternative scenarios for the adequacy of the country's gas supply in the event of a power outage from Russia.

The meeting will be attended by the President of RAE, Athanasios Dagoumas, the President of the Crisis Management Team and the Second Vice President of RAE, Dimitris Fourlaris, the CEO of DESFA, Maria Rita Galli, the CEO of DEFA Emporias, KO PPC CEO George Stassis, PPC Deputy CEO Ioannis Kopanakis and IPTO management representative.

Germany has activated the first level of emergency plan to manage the supply of gas to Europe's first economy in the framework of preparing for the disruption or termination of the flow of gas from Russia.

Russian exports account for 55% t Although this figure fell to 40% in the first quarter of 2022, Economy Minister Robert Habeck said Germany would not achieve full independence from Russia. supplies before mid-2024.

The problem that has arisen

Moscow announced last week the introduction of a mechanism by March 31 under which “Kremlin-friendly” countries that have imposed sanctions on Russia for its attack on Ukraine will pay in rubles for the purchase of Russian strong The measure concerns Germany and other European countries, which still pay in dollars. Robert Hubek, the German minister has rejected the Russian demand, saying that the contracts will be implemented on the terms they provide.

Russia's largest German customers are EnBW's Uniper, RWE and VNG, which have long-term contracts. They have not commented on individual preparations for the disruption of the gas supply.

Germany's three-level plan

The Berlin Emergency Plan for gas provides three levels of alarm.

The first level , activated by the German Government today, applies when there are indications that a gas supply emergency is likely to occur. Extremely high demand affects the normal balance, but there can be correction without intervention.

The third level is a state of emergency and is activated when market measures cannot address shortages. At this level, the network regulator, the Bundesnetzagentur, is called upon to decide how the country's existing oil reserves will be distributed.

Which sectors are directly affected

If Germany does not ensure an adequate supply of natural gas, industry, which accounts for a quarter of German demand, will be the first to suffer.

“This means that “Industrial production is being lost, supply chains are being lost,” said Leonard Byrnbaum , CEO of the E.ON energy group in the ARD network. “What is certain is that we are talking about very large losses.”

Households will have priority over industry, while hospitals, care centers and other public sector institutions with special needs will be the last to be are suffering from a shortage of gas.

Find rubles to buy it, says Moscow

Earlier today, Duma Speaker Vyacheslav Volodin warned the EU today that if it wanted to import gas from Russia, it would have to pay in rubles , adding that the same could apply to exports of oil, grain, metals and fertilizers. Russian President Vladimir Putin after imposing tough sanctions on Russia over its invasion of Ukraine called for gas exported to the EU to be paid for in rubles. The G7 energy ministers rejected the request yesterday, Tuesday, while French President Emanuel Macron told his Russian counterpart that such a thing would be impossible. “If you want gas, find rubles,” Volodin said in a post today. “In addition, it would be right where it benefits our country.” , to expand the list of products priced in rubles in order to include: fertilizers, cereals, oil, sunflower oil, coal, metals, timber, etc. “, he added.

Gas gets uphill again due to war and weather

It is noted that the prices of natural gas in Europe increased yesterday for the second consecutive day in the middle of colder weather, Norway's requirement to pay in rubles.

Futures for the first reporting month were 108.38 euros per megawatt hour , while they retreated slightly as Russia announced that it would reduce some military operations in Ukraine , as reported by Bloomberg. Gas prices in the United Kingdom were 7.2% higher at 263.42 pence.

The gas market is under multilateral pressure , with the war in Ukraine having entered its second month. Thus, the colder weather could delay the renewal of storage spaces, putting upward pressure on prices. Russia supplies about 40% of the European Union's gas demand and about a third of these shipments pass through Ukraine. At present, natural gas to Europe flows without interruption . Russian shipments to the continent via major pipeline routes remained stable on Tuesday, according to figures.

Gazprom PJSC also pledged space to transport gas to Germany via the Yamal-Europe pipeline yesterday and today, according to the auction results. However, below-April temperatures are forecast to be below average in northwestern Europe. Prices also rose from lower flows in Norway amid unplanned outages in the Skarv deposit.

In addition, European gas buyers have been reluctant to accept Russian President Vladimir Putin's demand for a ruble payment, adding another risk factor to a smooth supply.


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Source: politis.com.cy

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