Germany says Russia uses energy as a weapon

(Bloomberg) — Germany said Russia is using its energy exports as a «weapon» after Moscow cut natural gas supplies in retaliation for Europe’s sanctions over the war in Ukraine.

A unit of Gazprom PJSC that was seized by Germany has seen its deliveries cut by some 10 million cubic meters a day, according to German Economy Minister Robert Habeck, who is also deputy chancellor of the ruling coalition in Berlin.

It appears to be a largely symbolic move by Moscow, as Habeck said the cut amounts to around 3% of Russian gas imports from Germany. He said Europe’s largest economy can cope with the disruption in part by securing alternative supplies. There is no need to raise Germany’s alert level in its emergency plan in response to Moscow’s sanctions against Gazprom Germania GmbH, he added.

Russia’s decision to cut supplies shows that «confrontation over energy is a weapon,» Habeck said Thursday in a speech to the lower house of parliament. «Energy can be used powerfully in economic conflict.»

The reduction in supplies to the unit marks the latest escalation in Europe’s standoff with Russia over energy. Natural gas prices in the region soared due to retaliation and also due to disruptions to a key transit route through Ukraine. Russia had already cut supplies to Poland and Bulgaria amid a dispute over payment terms.

Germany is the biggest buyer of Russian gas, accounting for about 35% of the country’s supplies, up from more than half before Ukraine’s invasion in late February.

Fuel is a crucial part of the energy mix of Europe’s largest economy. About 15% of Germany’s electricity is generated from gas, compared to less than 9% in 2000, as the country phases out nuclear power and coal. The fuel is also essential for heating homes and for industrial processes in the chemical and pharmaceutical sectors.

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Moscow has banned dealings with Gazprom Germania GmbH and its various subsidiaries now under the control of Germany’s energy regulator. That includes energy provider Wingas GmbH, a European gas storage company, the London-based trading arm of Gazprom, and EuRoPol Gaz, which owns the Polish section of the Yamal-Europe gas pipeline connecting Russia with Germany.

«The situation is that the gas market can compensate for the loss of gas from Russia,» Habeck said.

Last month, Germany temporarily took control of Gazprom Germania. Most of the group’s companies came under pressure after customers and business partners refused to do business with them after the Russian invasion of Ukraine. That raised the possibility that the owners of key European energy infrastructure might not survive.

“We are monitoring the situation closely,” he told lawmakers. “We have prepared for the situation and I, and the federal network agency, will update you later in the day.”

original note:

Germany Says Russia Weaponizes Energy as Gas Feud Escalates

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