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Germany Develops Crisis Plan To Manage Sudden End To Russian Gas – Reuters


Germany Develops Crisis Plan To Manage Sudden End To Russian Gas – Reuters
According to a report published by the news agency Reuters based on source information, German officials are secretly developing an emergency package for any sudden halt in Russian gas supply, which could involve taking control of crucial enterprises.
The Ministry of Economic Affairs' preparations demonstrate a high level of concern regarding gas supplies, which power Europe's largest economy and are essential for the manufacturing of steel, plastics, and automobiles.
Last year, Russian gas accounted for 55% of Germany's imports, putting pressure on Berlin to end a business partnership that opponents claim is helping to bankroll Russia's war in Ukraine.
Germany has stated that it aims to wean itself from Russian gas imports, but that it will remain primarily reliant on Moscow until the middle of 2024.
It is uncertain whether a sudden halt would occur, and sources said Germany hoped to avoid an escalation by supporting a European gas embargo, after previously supporting penalties against Moscow on coal and oil.
However, they are concerned that Russia may cut off gas supplies unilaterally and want to be prepared.
Officials indicated that while a general framework is in place and the government is committed to assisting, the details of how the plan would be implemented are still being worked out.
The government would support more loans and guarantees to help energy companies cope with rising prices, and it may take essential companies like refineries under its wing, according to the three officials.
When asked for comment on the measures, Germany's economy ministry cited Vice-Chancellor Robert Habeck's assertions that the government has made "intensive efforts" in recent weeks to reduce its reliance on Russian energy.
Berlin passed a legal reform this month that allows it to take over energy businesses as a last option.
It is currently debating how it might put the measure into practise, such as seizing control of the PCK refinery in Schwedt, Poland, operated by Russia's Rosneft, according to two sources.
It is responsible for the majority of Germany's residual Russian oil imports and might be affected by an EU oil embargo.
Rosneft has been silent about any potential German action.
One person stated that nationalisation of energy corporations was being explored, but that it would have to be carefully reviewed and justified on the basis of securing energy supply rather than punishing Russia.
Germany could possibly invest in other companies, according to two sources familiar with the situation. To fight off an approach from China's State Grid, it conducted a similar step in 2018, when state development bank KfW bought 20% of energy network provider 50Hertz.
The final government emergency package is still being worked out. One person emphasised that minority stakes in firms and action at the Schwedt refinery were still being discussed but not decided.
Officials are also looking into how KfW might help vital enterprises by providing additional loans or emergency credit lines that they may use if energy prices rise and force them to make costly margin calls on their market positions.
KfW helped Uniper, EnBW's gas division VNG, and coal-fired power plant operator Leag deal with energy market instability earlier this year.
KfW will not say whose companies it had assisted.
In the event of an emergency, Germany is also considering how it would ration gas. Its regulator is debating whether to prioritise industry over households, reversing the current policy of prioritising enterprises over households.
The talks are taking place against the backdrop of the Ukraine conflict and an increasingly tense standoff between Moscow and Brussels, which has supported severe sanctions to isolate Russia.
At a parade on Monday, Russian President Vladimir Putin told his armed personnel they were fighting for their nation, but he gave no indication of how long the assault on Ukraine, which the Kremlin refers to as a special military operation, would go.
Last month, Russia's Gazprom froze gas exports to Poland and Bulgaria after they refused to pay in roubles, but the Kremlin has denied charges by the European Commission that Moscow was blackmailing them with natural gas supplies.
Russia, according to the Kremlin and Gazprom, is a stable energy provider.
A request for comment on supply reliability was not immediately returned by the Kremlin or Gazprom.
Berlin wants to draw a line after tentatively supporting sanctions on coal and oil, according to four officials.
They are concerned that restricting gas will cause prices to skyrocket, allowing Moscow to profit from sales outside the EU while still not depleting its war chest.