EU prepares for Russia to cut off gas supply over sanctions
Which rules apply in the EU if there's a shortage of gas?
Should Russia not resume gas supplies after maintenance work on the Nord Stream 1 pipeline is complete, the European Union would bring its 2017 Security Of Supply regulation into force. Under SOS, all EU member states should have emergency plans and a three-phase alarm system at their disposal. Not all governments, however, have done their homework in this respect.
EU member states are parts of regional groups that share common risks. One group is made up of the Baltic states and Finland, countries that have thus far been completely dependent on Russian gas and that have partly found alternatives already.
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Portugal, Spain and France are in another group. Those countries receive only small quantities of Russian gas and would not be directly affected by a delivery stop.
In a crisis situation, member states would be obliged to help each other in solidarity, which means providing each other with gas and exchanging information. In addition, EU member states are required to have their gas storage facilities at least 80% full until the heating season begins in autumn. The problem identified by many experts and politicians is that the loss of the largest gas supplier, Russia, makes mutual deliveries or filling storage facilities extremely difficult.
What is Germany's role in the EU's gas market?
Germany is the largest importer of Russian gas in Europe and an important transit country for pipeline gas transported via Nord Stream and other pipelines. However, what would happen if Germany were no longer to receive Russian gas? Would Germany then have to transfer gas received from Norway or the Netherlands, for instance, to other EU member states despite suffering from a shortage itself?
German Economy Minister Robert Habeck is currently negotiating solidarity agreements with neighboring countries. Those agreements will regulate supply in emergency situations. "We will have to take a look at all possible scenarios and what exactly will happen in which situation — i.e., when a disruption of gas supplies has to be officially announced, in which countries, in which steps, so that we know exactly what's happening," Habeck said on a recent visit to Czech Industry and Trade Minister Josef Sikela.
Habeck negotiated a treaty with the Czech government. There had to be a common administration of shortages, he said, so that individual countries would not be unduly affected. The Czech Republic, for instance, obtains its natural gas almost exclusively via pipelines in Germany. Poland, too, gets its gas supplies via Germany and the Nord Stream 1 pipeline, and Switzerland is completely dependent on gas supplies from Germany.
Will gas supply solidarity work in the EU?
The SOS regulation stipulates that gas only has to be offered to member states that have declared an emergency situation and made every effort to reduce consumption. According to the regulation, the buying and selling of gas would still be attended to by partly private, partly state-run gas suppliers, which is a complex procedure in times of crisis.
Putting a cap on gas prices, as proposed by Italy, has so far been rejected by the European Union as being counterproductive. Bulgaria, a country boycotted by Gazprom, still transfers Russian gas via its Turk Stream pipeline to Serbia and Hungary. Would this be able to continue in times of crisis?
Hungary has declared an emergency situation and banned all energy exports, meaning that it is no longer adhering to the solidarity principle.
"Not sure this is smart for a land-locked country with less than 3 bcm in storage, and 10 bcm of annual gas consumption," Georg Zachmann, a senior fellow in energy and climate policy at the Brussels-based think tank Bruegel, wrote on Twitter.
The European Commission had, for a long time, asked member states to conclude mutual agreements on solidarity supplies as Brussels has no central control mechanism on quotas — or anything comparable — in force. Thus far, Germany has signed three agreements: one with Denmark, one with Austria, one with the Czech Republic. In addition, there are further agreements between Lithuania and Latvia, Estonia and Latvia, Finland and Estonia, and Italy and Slovenia.
With regard to gas suppliers, another complex matter is ownership, which often crosses borders in the European Union's domestic market. The state of Finland, for instance, partially owns Germany's largest gas supplier, Uniper. The question is, therefore, which government would come to the rescue should private companies run into financial difficulties.
The main problem cannot simply be solved through coordination between member states nor by the plans submitted by the European Commission, said Markus Ferber, a Christian Democrat who represents Germany in the European Parliament: There is just not enough gas available. "It won't get us through the winter," Ferber said.
What are member states doing to avert a supply crisis?
The search for alternatives is on, under considerable pressure. Germany and the Baltic states have pinned their hopes on liquid gas imported from the Middle East or the US to be partially stored in floating terminals yet to be built. Italy is buying supplies from Algeria and Azerbaijan. Additional gas from Norway, the United Kingdom, Algeria and the Netherlands is being acquired at still increasing prices.
The European Commission estimates that this will not be enough to replace gas from Russia at short notice. Consequently, Brussels urges energy savings and less gas consumption in certain public institutions. Habeck recently suggested that it would not necessarily be wise to prioritize private households over businesses in extreme emergency situations.
Will there be changes to EU regulations?
The European Commission will submit an emergency plan next week. It stipulates that, in case of doubt, power generation in gas-fired power stations must be prioritized over private consumers' heating and cooking. The industry will, at this point at least, have secondary priority.
According to Germany's Economy Ministry, EU rules will have to be changed because they were set out for short-term supply disruptions in individual countries as opposed to large-scale shortage. The European Commission also intends to stipulate that public and commercial buildings will be heated to a maximum of 19 degrees Celsius (66 F). An EU platform for the joint purchase of gas has been set up but is not yet operational.
According to the European Commission's emergency plan, energy savings in private households and businesses will be able to offset about one-third of the gas shortage caused by Russia. But what about the remaining two-thirds? EU energy ministers will discuss this during a special summit at the end of July.
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