Finance Minister Robert Hubbek on Wednesday morning triggered an “early warning phase” of an existing gas emergency law to address acute energy shortages. The move was prompted by Germany’s concern that Russia could cut supplies to the country and its neighbors because they repel Moscow’s efforts to force it to pay for gas imports in rubles. Russian officials said on Tuesday that Moscow would not “supply free gas” to Europe, a day after the G7 countries unanimously rejected President Vladimir Putin’s directive demanding payments in rubles. During the early warning phase – the first of three phases of Germany’s emergency response – a crisis team from the finance ministry, regulator and the private sector will monitor imports and storage. If supplies fall short and less draconian efforts to reduce consumption are unsuccessful, the government will cut off parts of German industry from the grid and give households preferential treatment. Habek, who is also vice chancellor, told reporters in Berlin that the move came in anticipation of Russian law, which runs counter to naming long-term supply contracts in euros or dollars. “We will not accept a [unilateral] breach of contract, “Habeck reiterated on Wednesday morning. The EU has set a target of filling gas storage facilities to 80 per cent of capacity by the end of September to ensure the supply of its members during the winter. Germany’s gas storage facilities are currently about 26.5% full, after a four-year low of 24.6% earlier this month, according to Gas Infrastructure Europe. Habeck stressed that at present the gas supplies from Russia are running normally. However, as Germany seeks to move away from Russian gas and now imports more LNG, Russia’s market share in German imports has fallen from an average of 55 percent in recent years to 40 percent in recent weeks. Last week, Germany unveiled targets to quickly reduce its dependence on Russian energy, pledging to wean itself off the country’s gas by mid-2024 and become “virtually independent” of its oil by the end of this year. . The wholesale price of gas in Europe rose 8 percent to 114.45 euros per megawatt hour at the beginning of Wednesday. Russia’s state-owned gas supplier Gazprom and the country’s central bank are set to report to Putin on a mechanism to implement the change in the ruble gas payment currency. Some Russian politicians have argued that the deadline for changing the payment currency could come as early as the end of this month, although the Kremlin has not officially stated when the change will take effect.
