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When will effects of the Russian gas shut-off be felt in Germany?

Fears that Russia would turn off gas deliveries to Germany came true this month. Here's how households could be affected.

A gas metre in an apartment building.
A gas metre in an apartment building. Photo: picture alliance/dpa/dpa-Zentralbild | Jan Woitas

What’s going on? 

After dramatically reducing the supply of gas into Europe over summer, Russia took a step that many had been fearing for months and turned off the taps this September.

According to the Kremlin, the gas shut-off has to do with technical work required on the Nord Stream 1 pipeline connecting Russia with Germany and the rest of Europe. State-owned energy company Gazprom said it had discovered oil leaks in the pipeline while carrying out maintenance and claimed that “the reliability of the operation, of the whole system, is at risk,” requiring the pipeline to shut down.

The Russian gas giant had previously claimed it was unable to deliver gas supplies at full capacity through Nord Stream 1 due to a missing Siemens Energy turbine that had been undergoing repairs in Canada.

However, Germany – where the turbine is now – has claimed that Russia is blocking the return of the turbine in order to weaponise the energy supply. 

In addition, Siemens Energy has said in a statement that the alleged oil leaks would not interfere with the operation of the turbine and were therefore not a valid reason to pause gas deliveries via Nord Stream 1. 

READ ALSO: Russia halts gas supplies to Germany

What’s the real reason for the gas shut-off?

Many suspect it’s a tactical maneuvre designed to strong-arm the West into dropping the sanctions imposed on Russia and lessening its support for Ukraine. 

At the weekend, Russian ex-president Dmitry Medvedev (56) justified the Russian gas supply stop due to the “unfriendly behaviour” of the German government. Writing on Telegram on Sunday, Medvedev described Germany as “an unfriendly country” that had imposed sanctions “against the entire Russian economy” and was supplying “lethal weapons” to Ukraine.

Meanwhile, the Kremlin has said it would “definitely” resume gas deliveries if Europe agreed to drop the economic sanctions, which are believed to be having a major impact on the Russian economy. 

Does that mean there’s no gas coming from Russia whatsoever?

A tiny bit is still flowing into Germany via the Ukraine pipeline, but not in any meaningful quantities.

Most recently, gas deliveries from Russia equated to about 40 gigawatt hours (GWh) per day, compared to the approximately 350 GWh most recently supplied via Nord Stream 1 at just twenty percent of its usual capacity.

By comparison, around 2,800 GWh per day are currently being delivered from Norway, Belgium, and the Netherlands. 

Can Germany still fill up its gas reserves? 

So far this year, Germany has managed to beat its target of filling its gas storage facilities to 85 percent by the start of October, but experts aren’t sure whether it can still meet its targets in November.

Currently, the gas storage facilities are 86 percent full, with the government aiming to fill them up to 95 percent of capacity by November 1st.

It then wants to keep at least 40 percent of the gas in reserve until February 2023, providing additional security throughout the year and over the following winter. 

Gas storage facilities in Saxony-Anhalt.

Gas storage facilities in Saxony-Anhalt. Photo: picture alliance/dpa | Klaus-Dietmar Gabbert

Since the start of the Ukraine invasion in February, Germany has been scrambling to reduce its dependence on Russian energy products. While in April and May, Russia accounted for more than a third of Germany’s gas supplies, August saw the Russian share reduced to just nine percent, while Norway supplied 38 percent of the nation’s gas. 

It means that the end of Russian gas supplies leaves Germany in a less vulnerable position that it would been otherwise. However, experts believe that, without any deliveries from Russia, filling the storage facilities to 95 percent by November 1st will be a challenge. 

How long will the current reserves last?

When the gas reserves are filled to their full capacity, it can generally supply the nation’s energy needs for up to three months over winter.

At 90 percent full, the gas storage facilities can deliver 220 Terawatt hours of energy, which equates to just under two months during colder periods. 

Of course, a lot depends on how cold the winter is and how much businesses and citizens heed the government’s call to reduce their energy usage. At present, the Economics Ministry is hoping that financial incentives might convince industries to find ways to slash their energy use and contribute to energy savings of around 20 percent against last year.

Are there any other backup plans in place? 

Yes. At a European level, countries are relying on each other to show solidarity if supplies start to run low in some regions but not others. 

So far, Austria, Denmark, and France have all agreed to supply gas to Germany in an emergency. 

In addition, the government has been busy building numerous liquefied natural gas (LNG) terminals in the North Sea to assist with gas deliveries. 

READ ALSO: Germany plans more LNG capacity as Russian gas dwindles

How will ordinary people be affected?

So far, the main way that ordinary households have been affected by the energy supply issues is through soaring costs on the energy market.

From October, gas customers will have to pay a levy on top of their ordinary bills and will also see prices go up as suppliers pass on much of their increased costs to consumers. 

A gas hob is lit with a match.

A gas hob is lit with a match. Photo: picture-alliance/ dpa/dpaweb | Stephanie Pilick

Current laws state that private households would be among the last to have their energy turned off in the event of an emergency. 

However, some will have already been affected by the new energy saving rules announced by the government at the end of August, which include a ban on heating private pools and a ‘cold showers only’ rule at public swimming pools. 

READ ALSO: What to know about Germany’s new energy saving rules

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COST OF LIVING

German inflation edges up, as do real wages

German inflation edged up in May, data showed Wednesday, but analysts said it was due to one-off factors and would not deter the European Central Bank from starting to cut interest rates.

German inflation edges up, as do real wages

Consumer prices in Europe’s largest economy rose 2.4 percent from a year ago, according to preliminary data from federal statistics agency Destatis.

The figure, in line with analyst expectations, was up from 2.2 percent in April, and the first increase in six months.

At the same time, however, German real wages – which account for purchasing power – went up in the first quarter of 2024. With a 3.8 percent rise, that marks the highest jump in Germany over a single quarter since 2008.

Closely watched core inflation — which excludes volatile energy and food prices — was unchanged at three percent, despite expectations of a slight increase.

Observers said the uptick in the headline figure was caused mainly by the introduction of a flat-rate public transport ticket, costing just 49 euros ($53), in May 2023, which distorted the year on year comparison.

The rise is not expected to deter the central bank for the 20 countries that use the euro from beginning to cut rates at its meeting on June 6, with analysts predicting a quarter-point reduction.

Elmar Voelker from LBBW bank said the German data suggested inflation across the whole eurozone had ticked up in May.

But he added that this “will not change anything for the ECB’s decision next Thursday — (policymakers) had already anticipated that the inflation trend would be bumpier from now on,” and they will push ahead with starting to cut.

But they will be keenly watching inflation over the summer months to decide when to push ahead with further reductions, he added.

Beginning in mid-2022, the central bank aggressively hiked borrowing costs to tame inflation that soared following Russia’s invasion of Ukraine and amid pandemic-linked supply chain woes.

For the past few months, it has held its key deposit rate steady at a record high of four percent, as it awaits the right moment to start cutting.

In May’s German inflation figures, energy prices continued to fall, dropping 1.1 percent, Destatis said.

Services inflation rose to 3.9 percent, from 3.4 percent in April.

The German government forecasts inflation at 2.4 percent this year, following a 5.9-percent rate in 2023.

READ ALSO: The important money and tax changes in Germany in 2024

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