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Nord Stream 1: How prepared is Germany?

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FAQs

Status: 20.07.2022 21:53

How prepared is the federal government if little or no gas is flowing through Nord Stream 1? How expensive could gas be? The most important questions and answers.

By Jan Zimmermann, ARD Capital Studio

How is the gas supply in Germany?

“The situation is tense and a deterioration of the situation cannot be ruled out,” the Federal Network Agency has been describing for days. But the authority stresses: “The gas supply is stable at the moment.” Security of supply is always guaranteed.

The situation is more difficult with regard to German gas storage. Because much less gas arrives in Germany, it is more difficult to fill storage tanks for the coming winter. These are currently about 65% full. After Russian deliveries were frozen a week and a half ago, that number has only slowly increased as gas has also been pulled from storage at times.

In many storage systems, there is still a long way to go before the fill levels required by the Federal Ministry of Economics and Technology – 80% in October and 90% in November.

The largest German storage facility in Rehden, Lower Saxony, has just under 34%. However, the local operator is confident: so far “no effect of the Nord Stream shutdown” has been identified and it is also assumed that the gas can continue to be stored.

How has the federal government prepared?

The Federal Government, the Bundestag and the Bundesrat have presented and adopted several laws in recent weeks in order to be able to intervene protectively in the markets. On the one hand, Economics Minister Robert Habeck focuses on short-term gas savings – both in industry and in private households. There has been a lot of talk about prioritization over the past few days.

If necessary, Habeck could call the third and highest level of the gas emergency plan the “emergency level”. The Federal Network Agency would then regulate gas distribution. Bavaria already demands it. According to Bavarian Economics Minister Hubert Aiwanger, large gas-fired power plants should be closed now in order to save gas.

By ministerial regulation, Habeck can restart coal-fired power plants or keep them in operation longer. It has already issued such an ordinance for coal-fired power plants and promised it for lignite-fired power plants.

The European Commission has presented a gas emergency plan. According to this, Member States should – if necessary – be able to be forced to save gas. The precondition is that the Commission declares a state of emergency. It can also do so if requested to do so by at least three EU countries. EU states have yet to agree to this plan. In the coming months, countries should already voluntarily reduce their gas consumption by 15% compared to the average of the previous five years.

How much will the gas cost?

No one can answer this question exactly today. Since the Russian attack on Ukraine, the price of gas has in fact only gone in one direction: up. In June, the wholesale price fell for a while, but rose sharply again in July, even before July 11 and therefore before the Nord Stream 1 maintenance work. Recently, prices have stabilized at a high level. Consequently, businesses and consumers will also have to adjust to further increases in gasoline prices.

For households, prices have soared around 160% in one year, according to comparison portal Verivox. With an annual consumption of 20,000 kilowatt hours of gas (approximate consumption of a household of four to five people), the bill in July 2021 was still around 1200 euros, a year later it was almost 3200 euros. Experts predict that if Russia further reduces gas supplies or shuts down completely, prices could even triple.

How to replace Russian gas?

One thing is clear to energy experts and politicians: Russian natural gas cannot be individually replaced in the short term. Rather, the goal should be to save gas as much as possible. In order to save gas, more coal-fired power plants are to be operated again in the future. They are intended to replace gas-fired power stations in the production of electricity.

Where natural gas cannot be saved, the federal government relies on gas supplies from other countries. In the short term, for example, Norway and the Netherlands, which already supply Germany, must make even more gas available. The federal government is particularly focused on liquid gas. Four so-called LNG floating terminals are currently planned, one in Wilhelmshaven and one in Brunsbüttel should come into service by the end of the year.

The other two terminals should start next year at Stade and Lubmin. Tankers carrying liquid gas can dock at the floating terminals and from there bring the gas ashore via pipelines. A fifth floating terminal is also to be built in Lubmin in Mecklenburg-Western Pomerania by the end of the year. However, this investment is not supported by the federal government, but by a private consortium.

New suppliers are also sought under high pressure at EU level and found, for example, in Azerbaijan. In future, the country wants to deliver twice as much natural gas to Europe as before. The amount of gas is expected to increase from the current 8.1 billion cubic meters per year to 12 billion in the coming year and to 20 billion cubic meters per year by 2027. Azerbaijani gas flows through the Southern Gas Corridor, a gas pipeline conglomerate that transports natural gas from the Caspian Sea to Italy via Georgia and Turkey.

Agreements have already been reached with the United States, Qatar, Norway, Algeria and Israel in recent months. Egypt also offered itself this week as a gas supplier for Europe and Germany.

How big is the dependency?

Germany is still dependent on Russian gas. Before the war in Ukraine, the share of Russian gas supplies was over 50% for a long time. At the end of June, it fell to 26%, reports the Federal Ministry of Economics. This is also due to limited deliveries from Gazprom. In mid-June, the Russian public company more than halved its delivery volume via Nord Stream 1.

The Ministry of Economy assumes that by the end of the year, the share of Russian gas supplies in German gas consumption can be reduced to around 30%.

An immediate halt to deliveries will hit the economy hard, economists warn. Prices would most likely continue to rise and likely lead to crashes in the financial markets. The Ifo Institute estimates the costs at 220 billion euros if Germany has to do without Russian gas overnight. Economic output could fall by 6-12% as a result, and a recession is imminent.

Many businesses depend on gas, especially the chemical industry. With 15%, it is the largest gas consumer in Germany. If the gas emergency level is declared and the Federal Network Agency decides who receives how much gas, the pharmaceutical and food industries would have priority over, for example, candy producers, according to Klaus Müller, president of the Federal Network Agency.

Private households, hospitals and nursing homes enjoy special legal protection. But: The Federal Government has amended the Energy Safety Act, also in order to be able to prescribe gas-saving measures in the future. As a result, consumers could receive specifications to save gas.

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Source www.tagesschau.de

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