Germany’s largest natural gas storage chamber extends under a tract of farmland the size of nine football fields in the western part of the country. The rural area has become something of a battlefield in Europe’s attempt to defend itself against an impending gas crisis led by Russia.
Since last month, the German government has been pumping fuel into the sprawling underground site in Rehden at a rapid rate, hoping to fill it in time for the winter, when demand for gas to heat homes and businesses rises.
The scene is repeated at storage facilities across the continent, in an energy joust between Europe and Russia that has escalated since Moscow’s invasion of Ukraine in February.
In the latest sign that Moscow appears to be planning to punish Europe for sanctions and military aid to Ukraine, Gazprom, the Russian state-controlled energy giant, last week cut by 60 percent the amount of gas it supplies through Nord Stream 1. critical pipeline connecting Germany and other countries. It’s not clear whether the restriction is a precursor to a complete shutdown.
The move has made efforts in Germany, Italy and elsewhere to build up gas stocks even more urgent in a crucial effort to moderate prices in the stratosphere, reduce Moscow’s political influence and avoid the possibility of shortages this winter. Gazprom’s actions have also forced many countries to relax restrictions on power plants that burn coal, a major source of greenhouse gases.
“If the storage facilities are not filled by the end of the summer, the markets will interpret that as a warning of price spikes or even energy shortages,” said Henning Gloystein, director of Eurasia Group, a political risk company.
Gas prices are already extraordinarily high, about six times what they were a year ago. German Finance Minister Christian Lindner has warned that persistently high energy costs were threatening to plunge Europe’s largest economy into an economic crisis, and the government has called on consumers and businesses to save gas.
“There is a risk of a very serious economic crisis because of the sharp rise in energy prices, because of supply chain problems and because of inflation,” Mr Lindner told ZDF public television on Tuesday.
Last year the foundations were laid for an energy crisis. A late winter cold spell depleted gas reserves and Gazprom stopped selling inventories beyond its contractual obligations. Storage facilities owned by Gazprom in Germany, including the huge underground chamber in Rehde, over which the German government took control in April, were allowed to shrink to almost empty.
To avoid a repeat of last year and to avoid supply disruptions, the European Union agreed in May to require member states to fill their storage facilities to at least 80 percent capacity by November 1. So far, the countries are making good progress. to achieve this goal, with an overall European storage level of 55 percent.
The giant plant in Rehden is more than 12 percent full, but Germany, Europe’s largest gas consumer, has reached an overall level of 58 percent – both well above last year’s levels at this time. Other major gas users, including France and Italy, have stores of a similar level, while Spain has more than 77 percent.
But while storage levels continue to climb, Gazprom’s budget cuts are casting doubt on those goals and threatening a crunch next winter, analysts say.
If Nord Stream were to be shut down completely, “Europe would be unable to store any more gas by January,” said Massimo Di Odoardo, vice president of gas research at Wood Mackenzie, a consulting firm.
Gazprom blames the cuts on a pipeline part sent in for repair and not returned in time. But European leaders have flatly rejected this argument, and a German regulator said it saw no indication of how a mechanical problem could lead to such declines.
“The justification on the Russian side is just a pretext,” said Robert Habeck, Germany’s economy minister, last week. “Clearly the strategy is to distort and push prices up.”
The gamble succeeds. European gas futures are up about 50 percent in the past week.
The reduction in supplies from the German pipeline, which also affected flows to other European countries, including France, Italy and the Netherlands, shattered any remaining hopes among European leaders that they can rely on Russian gas, perhaps the most difficult. fuel to replace.
“It is now clear that the contracts we have with Gazprom are worth nothing,” said Georg Zachmann, senior fellow at Bruegel, a research institution in Brussels. Analysts say Moscow will likely continue to use gas for maximum leverage, doing everything possible to curb Europe’s storage-filling efforts, keep prices high and reduce the vulnerability of countries like Germany and Italy to political pressure on energy.
In recent days, the governments of Germany, the Netherlands and Austria have all taken steps to try to conserve gas, including turning to coal-fired power stations that were either closed or had to be phased out. The measures have raised concerns that the European Union’s efforts to achieve net-zero greenhouse gas emissions by 2050 will be moot.
Bringing back coal sends a signal “that is inconsistent with the environmental rhetoric of recent years,” said Tim Boersma, director of global natural gas markets at Columbia University’s Center on Global Energy Policy.
The government in the Netherlands continues to call on some sides to increase production at Groningen, a huge gas field that is being shut down because production there has caused earthquakes.
In Berlin, Chancellor Olaf Scholz has refused to consider keeping the country’s three nuclear power plants online. The reactors are planned to be shut down by the end of this year as part of the country’s efforts to end nuclear power.
Two years ago, Germany decided to phase out coal-fired power plants by 2038, in its quest to be carbon-free by 2045. But last week, Mr Habeck, who is a member of the Green Party, announced that the government is temporarily phasing out those efforts in response to the gas austerity measures.
The war between Russia and Ukraine and the world economy
A far-reaching conflict. The Russian invasion of Ukraine has had a ripple effect around the world, adding to the stock market woes. The conflict has caused staggering spikes in gas prices and product shortages, prompting Europe to reconsider its reliance on Russian energy resources.
For RWE, a major energy supplier in Germany, the reversal means a postponement of three plants that were scheduled to close in September. The plants burn coal, or lignite, the dirtiest form of fuel. The company is now struggling to find enough workers to keep the factories running.
The change will require a workforce of “several hundred positions,” said Vera Bücker, a spokeswoman for RWE. Some of them will be filled by delaying plans for workers to retire early, while others will be new hires for jobs slated to disappear by the first part of 2024, when the regulation expires.
The turnaround around coal is challenging for energy suppliers focused on the transition to natural gas as a bridge to renewable energy sources. Now they must find new coal sources and put aside plans to reduce CO2 emissions.
“How much carbon dioxide we emit depends on how long our factories have to run,” said Markus Hennes, the spokesperson for Steag, which runs several coal-fired power stations in western Germany. “But our emissions will increase. That is obvious.”
More troubling to some environmentalists, Germany and other European countries are rapidly building terminals to receive liquefied natural gas as an alternative to Russian gas.
On Tuesday, EnBW, a German utility company, signed a 20-year deal starting in 2026 with Venture Global, a US supplier of liquefied natural gas. In other words, Germany will import gas under this scheme until 2046.
“We risk getting stuck in a new era of fossil fuels,” said Mr. Zachmann of Bruegel.
