Germany faces threat of industrial shutdown if russian gas transit is stopped – Habeck
Despite large LNG supplies, Germany lacks alternative gas supplies
German authorities are warning of the risk of industrial shutdown if russian gas transit through Ukraine is stopped.
This was stated by the Minister of Economy and Vice Chancellor of Germany Robert Habeck, calling for measures to ensure energy security.
Source: Bloomberg
Habeck warned that after the expiration of the existing gas transportation agreement between Ukraine and russia at the end of next year, Germany will be forced to reduce or completely stop its industrial activities.
The rules introduced to prevent gas shortages in Eastern Europe will still apply, and Germany will have to export gas to these regions to compensate for the shortage, which in turn could lead to restrictions or reductions in supplies to German companies.
Habeck emphasized that there is no reliable scenario and noted that additional capacity, including the planned LNG terminal on Germany's northern coast, will be needed to maintain supply in both East Germany and Eastern Europe.
Despite russia's invasion of Ukraine, Kyiv still receives transit fees, allowing russian gas to reach recipients in countries such as Austria, Slovakia, Italy, and Hungary through its territory.
However, even if some supplies continue after 2024, it is unlikely that the current transit agreement will be extended on the current terms.
This is evidenced by a report published last week by the Center for Global Energy Policy. The authors of the report point out that "direct negotiations between Ukraine and russia to extend the transit contract look extremely unrealistic in the current environment."
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