Germany Warns, On Russian Gas, Poland To End Oil Imports

Germany and Austria activated early warning plans Wednesday amid concerns that Moscow could cut natural gas deliveries, while Poland announced steps to end all Russian oil imports by year's end, in fresh signs of how Russia's war in Ukraine is affecting Europe's energy security.

The German government said it was establishing a crisis team to step up monitoring of the gas supply, and called on companies and households to conserve energy following demands by Russia that deliveries should be paid in rubles. Western nations have rejected that demand, arguing it would undermine sanctions imposed because of the war. "There have been several comments from the Russian side that if this (payments in rubles) doesn't happen, then the supplies will be stopped," Economy Minister Robert Habeck told reporters in Berlin.

Hours later, German officials said Chancellor Olaf Scholz had received assurances from Russian President Vladimir Putin that European companies won't have to pay for Russian gas supplies in rubles but could continue to pay in euros as stipulated by existing contracts. Scholz had asked for further details of the process, which involves payments to a Russian bank not subjected to sanctions, his office said. Habeck had earlier said that the level one warning triggered - a step also taken Wednesday by Austria - was a precautionary measure and Germany was prepared for a sudden stop in Russian gas supplies. Still, he warned of "considerable impacts" if that were to happen and urged consumers to help prevent a shortage by conserving energy.

"We are in a situation where, I have to say this clearly, every kilowatt hour of energy saved helps," Habeck said. He added that Germany's gas storages are currently filled to about 25% capacity. A second warning level would require companies in the gas industry to take necessary measures to regulate supply. The third and highest level entails full state intervention to ensure those who most need gas - such as hospitals and private households - receive it, Habeck said. "We're not there and we don't want to go there," he added. France also called Wednesday for "those who can" to conserve energy, including electricity and gas, focusing especially on businesses and public facilities.

The country's gas storage facilities are "well filled," according to the head of its Regulatory Energy Commission, but still asked for some efforts to save energy. "If we don't do that, there is a risk next winter for consumption demand to be superior to our ability to meet that demand," Jean-Francois Carenco told the BFM news broadcaster. France gets about 70% of its electricity from nuclear plants but uses natural gas during peak demand at winter time and for home heating. Italy issued a pre-alert of the risks to its natural gas supply days after the war broke out, given its heavy reliance on Russia.

Energy transition minister Roberto Cingolani said at the time that the warning aimed to inform users of the "uncertainties linked to the conflict," while confirming supplies remained adequate to cover demand. It has not asked people to conserve. Meanwhile Poland, which has taken in millions of Ukrainian refugees, has taken the lead in the European Union on swiftly cutting off Russian fossil fuels. The 27-nation bloc has declined to sanction energy because it depends on Moscow for the fuel needed for cars, electricity, heating and industry, but it has announced proposals to wean itself off those supplies.

"We are presenting the most radical plan in Europe for departing from Russian oil by the end of this year," Polish Prime Minister Mateusz Morawiecki said at a news conference. On Tuesday Poland said it was banning Russian coal imports, expected by May. Morawiecki said Poland will take steps to become "independent" of Russian supplies and called on other European Union countries to "walk away" as well. He argued that money paid for Russia's oil and gas is fueling its war machine. While some in Europe are calling for an immediate boycott of all Russian oil and natural gas, the EU plans to reduce Russian gas imports by two-thirds by the end of the year and eliminate them before 2030.

In the meantime, rattled energy markets have pushed up already high oil and natural gas prices for Europeans and others worldwide. The EU is turning to investments in renewable energy as a long-term fix but also is scrambling to shore up alternative sources of fossil fuels, including a new agreement with the U.S. to receive more liquefied natural gas, or LNG, that arrives by ship. Poland is expanding an LNG terminal to receive deliveries from Qatar, the US, Norway and other exporters. A new Baltic pipeline bringing gas from Norway is expected to open by the end of the year.

It also has been reducing dependenceon Russian oil through contracts with Saudi Arabia, the U.S. and Norway and is considering imports from Kazakhstan. Germany, the EU's biggest economy and until recently reliant on Russia's natural gas for 55% of its needs, has signed deals with several suppliers of LNG, which is shipped to neighbouring European countries and then pumped in. German officials say they aim to end the use of Russian oil and coal this year and natural gas by mid-2024.

(PTI)