Home Business Germany and Austria Begin to Ration Gas, After Russia Sanctions Take Effect

Germany and Austria Begin to Ration Gas, After Russia Sanctions Take Effect

Germany and Austria Begin to Ration Gas, After Russia Sanctions Take Effect
Source: DM

Germany and Austria have activated emergency procedures in the event of a gas supply outage due to a payment dispute with Russia.

From March 31, Russia asked that “unfriendly” countries pay for its gas in roubles, but the EU, which mostly pays in euros, rejected the proposal.

Moscow appeared to soften its stance later, indicating on Wednesday that rouble payments will be phased in.

Germany and Austria, on the other hand, have already taken the initial steps toward gas rationing.

In preparation of anticipated shortages, Germany asked households and businesses to cut back on their consumption, while Austria said it was increasing its gas market surveillance.

Germany imports roughly half of its gas and a third of its oil from Russia, and has warned that if supplies are disrupted, the country might suffer a recession.

Neighbouring Austria is significantly more reliant on Russia for gas, receiving around 80% of its supply from the nation, and the office of Austrian Chancellor Karl Nehammer stated that measures such as gas rationing would only be used in a “urgent catastrophe.”

The “early warning phase,” which both Germany and Austria have started, is the first of three phases in an existing gas emergency plan meant to prepare the country for a probable supply crisis. Gas restrictions would be implemented at the end of the process.

Germany’s economics minister, Robert Habeck, said the country’s gas supply were safe for the time being, but that preventive steps were being increased in case Russia escalated the situation.

The goal of the early warning, according to Klaus Müller, director of the German network regulator Bundesnetzagentur, is to avert a supply decline. Consumers and businesses should be prepared for “all situations,” he said.

Dmitry Peskov, a spokesperson for the Kremlin, announced on Thursday that Russia will no longer require rouble payments.

“Payments and delivery are time-consuming processes… from a technology standpoint, this is a longer procedure,” he explained.

In reaction to Russia’s invasion of Ukraine, the West has imposed sanctions on it.

Russian President Vladimir Putin has responded by demanding that natural gas sold to Europe be paid for in roubles.

Analysts believe the decision would help the country’s currency, which has begun to rebound after a severe drop following the invasion.

Europe, which buys roughly 40% of its gas from Russia and pays primarily in euros, claims that Russia’s state-owned gas giant Gazprom is unable to renegotiate contracts.

“European politicians ought to stop talking, stop trying to find some reason for why they can’t pay in roubles,” Vyacheslav Volodin, the speaker of the Russian parliament’s lower chamber, said on Wednesday.

“Find roubles if you want petrol.”

Russia may also require payment in roubles for other goods such as fertilizer, grain, metals, and lumber, according to the Kremlin.