Berlin — European leaders facing the worst energy crisis in decades have been extraordinary to secure winter supplies amid fuel shortages and near-record power and gas prices. We are taking measures.
In Berlin, lawmakers were preparing to approve a bill that would pave the way for Germany to bail out Russia’s largest gas-importing country. In Paris, the Prime Minister announced the government’s intention to take full control of the French state-owned power company.
Soaring energy costs caused by the steady decline in Russia’s gas transport are raising concerns that energy companies may collapse. This is a spiral that the German Energy Minister likened to how the collapse of Lehman Brothers in 2008 caused the global financial crisis.
Henning Groystein, director of the Eurasia Group, a political risk company, said: “Private companies cannot bear these costs.”
Confusion is felt throughout the continent as countries such as Austria, France and the Czech Republic are trying to find enough gas to fill their storage tanks before the temperature drops. July.
But it feels most serious in Germany, Europe’s largest economy. Germany has relied on Russia for most of its gas for years. The imminent threat is that next winter’s shortages could lead to gas distribution and industry closures, which in turn could lead to unemployment and protests. Last month, Germany enacted the second phase of its three-stage gas emergency program. In the third stage, the government can introduce a rationing system.
Residents of Saxony’s Municipal Housing Complex recently learned that they could turn off hot water for up to four hours a day to save gas. Companies have already taken steps to reduce gas consumption and need to further reduce flow by developing emergency response plans.
Measures voted by the German Parliament on Thursday aim to enable the government to put a lifeline on companies suffering from record high gas prices and cuts in supply from Russia.
In addition, suppliers can pass on price increases to consumers if authorities determine that a significant reduction in total gas imports into Germany is imminent. For months, some economists have argued that measures such as soaring electricity prices in homes are essential to move beyond Russia’s dependence on gas.
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Uniper, Germany’s largest Russian gas importer and energy provider, could be the first beneficiary of the legislative amendment. Last week, after revising its financial forecasts, the government was discussing the possibility of bailouts and said it expects earnings to be “well below” the previous year’s earnings.
With 5,000 employees in Germany and several gas-fired power plants and gas storage facilities, the company is an important supplier of electricity to hundreds of cities and towns.
Uniper is facing increasing losses since Russia’s gas giant Gazprom cut its natural gas supply through the Nord Stream 1 pipeline by 60% last month. Contracts with local governments and companies.
An analyst at S & P Global Ratings, which assesses a company’s creditworthiness, said on Wednesday that a shortage from Gazprom, which normally supplies more than 50% of Uniper’s gas, caused huge daily losses with a “low to moderate doubling.” Estimated to bring to. -Digits “millions of euros. S & P writes that red ink could increase if the supply from Gazprom further declines.
Germany’s economic minister, Robert Habeck, warned that the situation could worsen, but said the government would not allow the collapse of an energy company to collapse the entire European market.
“We don’t recognize the systematic impact on the German and European gas markets, as the domino effect will occur and corporate bankruptcies will even affect the security of other sectors and even overall supply,” he told reporters on Tuesday. Said.
In France, Prime Minister Elizabeth Borne has announced a similar move on French power, a state-sponsored nuclear power company. EDF has been forced to take about half of its reactors offline, pushing companies that are already in trouble deeper into debt.
“Today I confirm the state’s intention to own 100% of EDF’s capital,” Borne told lawmakers without providing details. France is betting on nuclear power plants to survive the energy crisis. Nuclear power plants supply about 70% of electricity and have the largest share of any other country.
A new threat to energy supply will emerge on Monday, when NordSteam 1, a pipeline connecting Germany’s north coast and Russia’s gas fields, will be shut down for 10 days due to regular maintenance each year.
Eurasia Group’s Groystein said in a recent note that there are growing concerns that Gazprom’s shipments to Europe will be “permanently reduced, increasing the likelihood of gas shortages next winter.”
Reductions from Russia have increased the importance of Norway, which has become Europe’s largest gas supplier, and are boosting exports to counter Russia’s reductions. A strike by Norwegian gas field workers this week threatened to cut off up to 60% of supply to Western Europe, but the government quickly intervened and stopped working.
“Norway has played an important role in supplying gas to Europe, and the planned escalation would have had serious consequences for the United Kingdom, Germany and other countries,” said Norwegian Labor Minister Marte Myoes. Persen told Reuters about the strike. “In the light of the current situation in Europe, the impact would have been dramatic,” she added.
Norwegian gas is essential to efforts to fill German storage facilities, some of which are owned by Gazprom and have been depleted in the months leading up to the invasion of Ukraine. According to government agencies, the facility is currently over 62% full, and if Russia shuts off all gas flow through Nord Stream 1, it will be nearly impossible to reach the 90% target by November. Added.
This concern has already doubled the price of natural gas in Europe last month to around 160 euros per megawatt hour. Its price is about $ 280 per barrel of oil, almost three times the price currently acquired by the American standard West Texas Intermediate.
Economists have warned that high energy prices and a shortage of stored gas could put Germany and all the European Union into a recession that will last until 2023.
“The EU is likely to run in the sky at the end of winter,” said Holger Schmeding, chief economist at Belemberg, if Russia did not turn Nord Stream 1 back on by July 21. I am writing in. “The situation would be even worse if Russia closed other pipelines to Europe in late July.”
Melissa Eddie reported from Berlin and Stanley Reed from London.
