Germany moves closer to rationing gas as supply cut

Germany moved closer to rationing gas on Thursday after Russia slashed supplies to the country, as it raised the alert level under an emergency plan.

Economy Minister Robert Habeck told reporters at a press conference that gas is now a scarce commodity in Germany.

Triggering the second alarm level under its action plan brings Germany closer to the third and final stage that could see gas rationing in Europe's top economy.

Habeck said that there was a significant deterioration of the gas supply situation.

Germany, like a number of other European countries, is heavily dependent on Russian energy imports to meet its needs.

Russian energy giant Gazprom reduced supplies to Germany last week via the Nord Stream pipeline by 60 percent due to a delayed repair.

Germany has brushed aside the technical justification of the move, instead calling it a political decision by Russia to use gas as a weapon against Germany in retaliation for the West's support for Ukraine after Moscow's invasion, with the aim of destroying European unity, Habeck said.

Gazprom has stopped deliveries to a number of European countries, including Poland, Bulgaria, Finland and the Netherlands.

Energy companies are still in a position to manage the crisis, so supplies of gas to Europe's largest economy were secure as they were, with energy companies still in a position to manage the crisis, according to Habeck.

The higher alert level would lead to increased monitoring of the supply situation, but there was still time to prepare for the winter ahead.

If we do nothing now, things will get worse, Habeck said.

In April, Germany mandated gas storage facilities to be filled to 90 percent by the beginning of December to mitigate the risks from a supply cut.

The country's stores are only over 60 percent full, above the average level of previous years.

The targets would be hard to hit if exports to other countries were not limited, as it would be hard to justify within Europe.

Germany could face an acute gas shortage in February 2023, and a further reduction in supplies via the Nord Stream pipeline could make the situation worse, if we were to return to the level of before the recent supply squeeze.

The German government anticipates that supply will stop between July 11 and July 25 for maintenance on the pipeline.

Germany could face a shortage of gas as soon as mid December if deliveries don't resume after the service period. Germany has managed to reduce the share of natural gas supplied by Russia from 55 percent to 35 percent.

The government has found new sources of supply, accelerated plans to import gas in the form of LNG by sea, and put aside 15 billion euros $15.8 billion to buy gas to fill storage facilities.

Germany decided to reactivate mothballed coal-fired power plants to take the burden for electricity generation off gas.

The government shrugs off calls to extend the operational life of its nuclear power plants.

It was not an option to extend the use of the final reactors set to be taken off the grid at the end of the year.

Germany had to look to see what the energy saving potential was, Habeck said Thursday.

After Germany launched a campaign to encourage fuel-saving measures, households could make a difference by conserving energy, he said, while industry could make a further contribution.

Wolfgang Grosse Entrup, head of the German chemical industry lobby, said the economy faced significant challenges.

Entrup said the burden between companies had to be shared fairly, because the sector is heavily dependent on gas to power production.