Market News Develop contingency plans and build LNG terminals. Can Germany cope with Russia's "gas cut"?
Develop contingency plans and build LNG terminals. Can Germany cope with Russia's "gas cut"?
Germany has taken over Gazprom's abandoned Ryden gas storage in Germany and filled it with gas to increase its reserves.
2022-05-10
11662
Germany is gearing up for a cut in Russian gas supplies.
It is reported that the German government is preparing an emergency plan to deal with Russia's sudden interruption of natural gas supplies.
The plan, led by the German Ministry of Economic Affairs, has completed a broad framework and is currently finalizing the details of its implementation.
According to reports, in order to ease the pressure on energy companies, the German government will provide them with further loans and guarantees. In an emergency, it is also possible for key businesses to obtain emergency credit lines through KfW.
Germany is also considering the possibility of nationalizing energy companies. On April 25, the German cabinet passed an amendment to the Energy Security Act, which stipulates that in the event of an energy crisis, the German government is allowed to nationalize energy companies and take over companies operating critical energy infrastructure.
Germany has reportedly taken over Gazprom's abandoned Ryden gas storage facility in Germany and filled it with natural gas to increase its reserves.
Taking into account the impact on the industrial sector after Russia's natural gas supply cut off, German officials are also studying to revise the natural gas rationing policy in emergency situations to give priority to ensuring the use of natural gas in the industrial sector.
Under the current energy quota supply policy, German residential buildings and critical infrastructure such as hospitals have priority in energy consumption.
As an energy-starved industrial powerhouse, Germany is heavily dependent on Russian natural gas.
In 2021, 55% of Germany's total natural gas imports will come from Russia. That figure had dropped to 35% in April this year after increasing alternative supply.
Earlier, Russia demanded that "unfriendly countries" including EU countries pay for natural gas in rubles, and suspended gas supplies to Poland and Bulgaria on April 27.
German Chancellor Scholz said that Germany must prepare for the possibility of becoming the next country to be killed.
So far, Germany has not agreed to pay for Russian gas in rubles.
To reduce its reliance on Russian gas, Germany needs to import more liquefied natural gas (LNG) from other countries, but Germany has never had an LNG import terminal.
To this end, Germany has decided to accelerate the construction of two LNG terminals and use floating storage and regasification units (FSRUs) as an interim measure to gasify LNG.
Germany has earmarked about 2.94 billion euros in the budget for the construction of the first LNG import terminal facilities.
A few days ago, German energy giant Uniper announced that it will build and operate Germany's first LNG terminal in Wilhelmshaven.
After the facility is put into operation, it is expected to provide at least 7.5 billion cubic meters of natural gas per year, meeting about 8.5% of Germany's demand.
German Deputy Chancellor and Economy Minister Habeck said the first vessel to transport LNG is expected to dock here by the end of this year.
Germany also hopes to build an LNG terminal in another port city, Brunsbüttel, with an annual throughput of 8 billion cubic meters.
Once these terminals are operational, they could replace about a third of the gas supply Germany currently receives from Russia.
But there are doubts that Germany will be able to complete the LNG terminal as expected. For example, Eric Heymann, senior economist at Deutsche Bank, said it would take at least three years to build the two terminals.
In addition, Germany also needs to ensure sufficient supply in the tight LNG market.
Germany and Qatar are reportedly at odds over the negotiated terms of an LNG supply agreement and cannot sign a cooperation agreement anytime soon.
Qatar, the world's largest LNG exporter, requires Germany to sign long-term LNG contracts with prices linked to oil prices and does not allow Germany to resell LNG to other European countries.
Germany has yet to accept the terms and is expected to negotiate further with Qatar in May.
If Russia's natural gas is suddenly interrupted, it will have a huge impact on Germany. According to the "Financial Times" report, research by an economic adviser to the German government shows that if this happens, the German economy will face a loss of 429 billion euros, equivalent to 12% of Germany's annual gross domestic product.
Russia's immediate and complete cessation of gas imports, combined with the coal embargo already agreed and the looming oil embargo, could amount to a drop in GDP during the 2009 financial crisis or the 2020 coronavirus crisis, he said.
The EU is moving forward with a sixth round of sanctions against Russia, including an embargo on Russian oil. As a member of the G7, Germany has agreed to gradually reduce or stop imports of Russian oil.
A few days ago, the European Union passed a sanctions plan to ban imports of Russian coal this summer.
Article source: Interface News
It is reported that the German government is preparing an emergency plan to deal with Russia's sudden interruption of natural gas supplies.
The plan, led by the German Ministry of Economic Affairs, has completed a broad framework and is currently finalizing the details of its implementation.
According to reports, in order to ease the pressure on energy companies, the German government will provide them with further loans and guarantees. In an emergency, it is also possible for key businesses to obtain emergency credit lines through KfW.
Germany is also considering the possibility of nationalizing energy companies. On April 25, the German cabinet passed an amendment to the Energy Security Act, which stipulates that in the event of an energy crisis, the German government is allowed to nationalize energy companies and take over companies operating critical energy infrastructure.
Germany has reportedly taken over Gazprom's abandoned Ryden gas storage facility in Germany and filled it with natural gas to increase its reserves.
Taking into account the impact on the industrial sector after Russia's natural gas supply cut off, German officials are also studying to revise the natural gas rationing policy in emergency situations to give priority to ensuring the use of natural gas in the industrial sector.
Under the current energy quota supply policy, German residential buildings and critical infrastructure such as hospitals have priority in energy consumption.
As an energy-starved industrial powerhouse, Germany is heavily dependent on Russian natural gas.
In 2021, 55% of Germany's total natural gas imports will come from Russia. That figure had dropped to 35% in April this year after increasing alternative supply.
Earlier, Russia demanded that "unfriendly countries" including EU countries pay for natural gas in rubles, and suspended gas supplies to Poland and Bulgaria on April 27.
German Chancellor Scholz said that Germany must prepare for the possibility of becoming the next country to be killed.
So far, Germany has not agreed to pay for Russian gas in rubles.
To reduce its reliance on Russian gas, Germany needs to import more liquefied natural gas (LNG) from other countries, but Germany has never had an LNG import terminal.
To this end, Germany has decided to accelerate the construction of two LNG terminals and use floating storage and regasification units (FSRUs) as an interim measure to gasify LNG.
Germany has earmarked about 2.94 billion euros in the budget for the construction of the first LNG import terminal facilities.
A few days ago, German energy giant Uniper announced that it will build and operate Germany's first LNG terminal in Wilhelmshaven.
After the facility is put into operation, it is expected to provide at least 7.5 billion cubic meters of natural gas per year, meeting about 8.5% of Germany's demand.
German Deputy Chancellor and Economy Minister Habeck said the first vessel to transport LNG is expected to dock here by the end of this year.
Germany also hopes to build an LNG terminal in another port city, Brunsbüttel, with an annual throughput of 8 billion cubic meters.
Once these terminals are operational, they could replace about a third of the gas supply Germany currently receives from Russia.
But there are doubts that Germany will be able to complete the LNG terminal as expected. For example, Eric Heymann, senior economist at Deutsche Bank, said it would take at least three years to build the two terminals.
In addition, Germany also needs to ensure sufficient supply in the tight LNG market.
Germany and Qatar are reportedly at odds over the negotiated terms of an LNG supply agreement and cannot sign a cooperation agreement anytime soon.
Qatar, the world's largest LNG exporter, requires Germany to sign long-term LNG contracts with prices linked to oil prices and does not allow Germany to resell LNG to other European countries.
Germany has yet to accept the terms and is expected to negotiate further with Qatar in May.
If Russia's natural gas is suddenly interrupted, it will have a huge impact on Germany. According to the "Financial Times" report, research by an economic adviser to the German government shows that if this happens, the German economy will face a loss of 429 billion euros, equivalent to 12% of Germany's annual gross domestic product.
Russia's immediate and complete cessation of gas imports, combined with the coal embargo already agreed and the looming oil embargo, could amount to a drop in GDP during the 2009 financial crisis or the 2020 coronavirus crisis, he said.
The EU is moving forward with a sixth round of sanctions against Russia, including an embargo on Russian oil. As a member of the G7, Germany has agreed to gradually reduce or stop imports of Russian oil.
A few days ago, the European Union passed a sanctions plan to ban imports of Russian coal this summer.
Article source: Interface News
Bonus rebate to help investors grow in the trading world!
Or try Free Demo Trading