Germany, Europe Brace For Energy Crunch As Second Russian Pipeline Goes Down

Germany, Europe Brace For Energy Crunch As Second Russian Pipeline Goes Down

As I arrived in Berlin today after a gap of almost a year, I noticed how big businesses and ordinary Germans are gearing up for a massive power crisis triggered by the dwindling Russian energy supplies. (Some of our regular readers may recall that I am a German national currently residing in South Africa.)

Government ministers, who haven’t done an honest day’s work in their lives, have taken it upon themselves to ‘educate’ hardworking Germans on how to save on electricity, room heating, and hot water.

I have always considered German media and public debates, whether over Climate Change, Brexit, or pandemic, to be driven by wild hysteria and doom-and-gloom predictions. But this time, the German Angst is based on some challenging and bitter facts.

For years, mainly under former Chancellor Angela Merkel’s watch, the country became hooked on cheap Russian gas, which covered industrial and household needs. With Europe now trying to push back against Russia in the wake of the Ukraine war, President Vladimir Putin is using gas as his crucial bargaining chip.

The pain inflicted by Putin is beginning to hurt ordinary Germans. “Utility companies are passing on the increased costs of gas to their customers. Gas heats more than half of the homes in Germany, and many residents will struggle to pay for it,” German state broadcaster Deutsche Welle reported last month.

Since then, the prices have soared even further, with the German newspaper Bild noting on August 12 that the “electricity and gas prices are going through the roof. The electricity already costs more than four times as much as it did a year ago, and gas seven folds as much.”

Putin Makes German and European Economy Scream

Days after Russian state-owned energy Gazprom announced that it was temporarily halting its main natural gas pipeline to Europe (Nord Stream 1), another gas pipeline — this time the one that brings gas from the former Soviet republic of Kazakhstan via Russia — has gone out of operation “due to damage.”

The Europeans, particularly the Germans, are not buying the Russian claims. They believe the Kremlin is punishing them for imposing sweeping sanctions following the Ukraine invasion.

Reuters reported Monday:

Europe faces fresh disruption to energy supplies due to damage to a pipeline system bringing oil from Kazakhstan through Russia that was reported by the pipeline operator on Monday, adding to concerns over a plunge in gas supplies.

CPC, which handles about 1% of global oil and whose largest shareholder is Russian pipeline firm Transneft, said exports from two of its three mooring points at a Black Sea terminal had been suspended, confirming a Reuters report.

The West accuses Russia of restricting energy supplies to boost prices in retaliation for sanctions imposed after Moscow’s invasion of Ukraine, which the Kremlin calls a special military operation. Russia denies this, blaming Western sanctions themselves and various technical problems.

Russian natural gas supplies to Europe are down around 75% year on year, with export company Gazprom last week announcing unscheduled maintenance on the Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany.

Natural gas prices jumped on Monday, with outages at Norwegian and UK gas fields adding to concerns.

Germany, Canada to Sign Energy Deal

In a desperate bid, Germany’s Chancellor Olaf Scholz traveled to Canada early this week in the hope of signing gas and oil deals.

But Germany is too entangled in the web of Russian pipelines that Canadian Prime Minister Justin Trudeau can’t be of any help, at least not this winter. Germany’s Deutsche Welle admitted that the proposed Scholz-Trudeau “deals on LNG and green hydrogen won’t be able to offer a solution to the Germany’s fear of an energy shortage during winter, as Canada currently holds no LNG terminals for export.”

Politico noted last Friday that the “two progressive leaders” Scholz and Trudeau were “feeling the heat of juggling ambitious and expensive green agendas in a high inflation era.”

As Margaret Thatcher once said, “The facts of life are conservative.” The “progressive” political class has long ignored common sense and reality. Now the facts of life are coming back to bite them with a vengeance.

The Deutsche Welle reported:

German Chancellor Olaf Scholz and his deputy, Economic Affairs and Climate Action Minister Robert Habeck, kicked off a three-day trip to Canada on Monday, seeking to arrange short-term gas-based energy solutions and to explore longer-term, cleaner options, such as green hydrogen. (…)

The focus of the negotiations with Germany will lie on the supply of liquefied natural gas (LNG) and green hydrogen amid Berlin’s attempt to lessen its dependence on Russia as a supplier of gas. (…)

However, deals on LNG and green hydrogen won’t be able to offer a solution to the Germany’s fear of an energy shortage during winter, as Canada currently holds no LNG terminals for export.

Even before the winter can arrive, Germany is tapping into its strategic gas reserves to keep the industry and economy going.

If Russia completely shuts down the gas supply, Germany’s reserves will last less than three months. “Germany will struggle to have enough natural gas to get through the coming winter, even if reserves are replenished in line with government targets,” Bloomberg News estimated. “Refilling gas inventories to 95% full by November would only cover about 2-1/2 months of heating, industrial and power demand if Russia cuts off supplies completely.”

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