Germany has triggered emergency plans to manage gas supplies following the Kremlin’s demand for contracts to be paid in roubles.
This has raised the prospect of power rationing in Europe’s largest economy if Russia further reduces gas flows into Germany.
The country’s Economy Minister Robert Habeck has activated the ‘early warning phase’ of an existing emergency plan.
The ‘early warning’ phase is the first of three potential stages, with the government able to trigger the “alarm” and “emergency” phases if the situation worsens.
This initial stage means that a crisis team from the economics ministry, the regulator and the private sector will monitor domestic imports and storage.
If supplies fall short, Germany’s network regulator can ration gas supplies, with industry being first in line for cuts.
Habeck urged consumers and companies to reduce consumption, and argued that “every kilowatt hour counts”.
He said: “We must increase precautionary measures to be prepared for an escalation on the part of Russia. With the declaration of the early warning level, a crisis team has convened.”
European and UK gas prices have spiked over 10 per cent today after the announcement.
EU split over energy sanctions
The latest measures from the government follow calls from BDEW – which represents nearly 2,000 supply operators – for the German government to set up an early warning system to tackle potential gas shortages.
Its president, Kerstin Andreae, said: “There are concrete and serious indications that the gas supply situation is about to deteriorate.”
The European Union (EU) remains split over the prospect of imposing sanctions energy sanctions on Russia.
The bloc is reliant on Russia for around 40 per cent of its natural gas, with Germany depending on the country for over half its supplies.
While it suspended the Nord Stream 2 approval process last month – cutting off Russian supplies would have serious ramifications.
Half of Germany’s 41.5m households rely on natural gas, while country’s industry accounted for a third of the 100bn cubic metres of national demand in 2021.
The EU is aiming to cut its dependency on Russian gas by two-thirds this year, and end Russian fossil fuel imports by 2027.
It is also calling on members to ensure 90 per cent gas storage ahead of this winter.
Russia expected to unveil rouble payment system this week
Russia’s demand for rouble payments was rejected by G7 nations and EU leaders earlier this week.
The call is widely perceived as a retaliatory measure, after the West imposed heavy sanctions on following Russia’s invasion of Ukraine.
Last Friday, the US revealed it will aim to supply 15 bcm of liquefied natural gas to the EU this year in hopes of easing supply worries.
Russia has not said when the currency change will take effect but could reveal its plans for rouble payments later this week.
The country’s central bank, the government and Gazprom are set to present their proposals for rouble gas payments to Russian President Vladimir Putin by tomorrow.
Vyacheslav Volodin, the speaker of the lower house of parliament, has warned that oil, grain, metals, fertiliser, coal and timber exports could also soon be subject to rouble requirements.
Russian gas deliveries to Europe on three key pipeline routes showed a slight upward tick on Wednesday morning include the resumption of westward flows on the Yamal-Europe pipeline to Germany, operator data showed.