Wednesday, June 19, 2024
Wednesday, June 19, 2024
Home » Germany keen to discuss natural gas pact with UK amid supply risk

Germany keen to discuss natural gas pact with UK amid supply risk

by Finley Hawkins
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Officials interested in deal that would allow two countries to bail each other out in event of shortages

Germany is keen to talk to Britain about a solidarity pact that would allow Europe’s largest consumers of natural gas to bail each other out if an extreme cold snap were to create shortages this winter, German officials have said.

Such an agreement could be mutually beneficial for both London and Berlin, the German civil servant in charge of rationing in the case of a supply crisis told the Guardian in an interview.

“With its long coastline, the UK has a geographic advantage when it comes to infrastructure for importing liquid natural gas [LNG],”, said Klaus Müller, the head of the federal network agency for utilities, Bundesnetzagentur. “But the experience of the last few weeks has also shown us that the size of the gas network also matters. The larger the network, the easier to adjust temporary deficits.”

While the legal consequences of Brexit mean an emergency aid scheme between London and Berlin could not replicate “security of supply” (SoS) deals struck between European Union member states, Müller and German government spokespeople indicated a willingness to cooperate outside existing regulation.

“Legally, Great Britain has left European solidarity mechanisms, but the pipelines between the countries are still there,” said Müller, a member of the Green party and former environment minister in the northern state of Schleswig-Holstein.

“We would always raise our voice to say: let’s act with as much European solidarity as possible.”

A spokesperson for the British prime minister, Rishi Sunak, said on Tuesday Downing Street was open about its desire to work with a number of countries to help manage volatility in energy prices, but specifically mentioned the US as one country “where we do feel that there is more we can do to work together”.

Germany faces prolonged uncertainty over gas supplies to its energy-hungry industries, leaving Europe’s largest economy in the unfamiliar role of appealing to other EU states to show more solidarity after a dramatic plunge in Russian exports amid western opposition to its war against Ukraine.

Germany, which has indirect pipeline links with the UK via Belgium, has signed SoS agreements with Austria and Denmark, but has reportedly been frustrated by a reluctance from Belgium, the Netherlands, Poland and Luxembourg to sign similar pacts. Talks with the non-EU member Switzerland also appear to have stalled.

The European Commission is keen for more member states to strike such deals to avoid a bidding war driving up prices in such a scenario.

A spokesperson for the German ministry for economic and energy affairs said previous agreements were struck within the EU framework, and there was no such framework for the UK.

“Of course, nothing stands in the way of also striking such agreements with Great Britain in principle,” they said. “The federal government is working on opening up every possible path for further gas supplies. A conversation with Great Britain would fit into that plan.”

Britain, which produces around 44% of its own gas, has traditionally been less reliant on imports from Russia than countries such as Germany, Austria or Greece.

A British government spokesperson said: “The UK has a secure and diverse energy system. We are not dependent on Russian energy imports and have plans to protect households and businesses in the full range of scenarios this winter, in light of Russia’s illegal war in Ukraine.”

However, the UK still meets around half of its gas needs through imports from the increasingly competitive international market and has some of the continent’s lowest gas storage capacity.

Müller said he was surprised by the lack of a British energy-saving campaign under the short tenure of the former prime minister Liz Truss.

“I think it’s important for governments to come clean with their citizens: without a significant reduction in our gas use we won’t get through this winter without problems. Campaigns urging consumers to make such savings are the right thing to do, because they can be empowering. Keeping quiet about the risks, or denying them, that strikes me as the wrong strategy.”

Müller said he was increasingly confident his country had “a good chance” of making it through winter without having to ration supplies.

“Thanks to imports from Norway, Belgium, the Netherlands and France, Germany is getting a lot more gas from its neighbouring countries than in previous years,” he said, allowing the country to fill 99.4% of its storage tanks as of this week, a record.

An unusually mild start to autumn meant German households and businesses had in recent weeks made energy savings higher than the 20% set as a target by the government, and the country only started using its reserves over the last few days, weeks later than in previous years.

“If we manage to stick to the 20% savings target as a minimum, have an average winter temperature and no unexpected events in our neighbouring countries, then Germany has a chance – and by now I would say a good chance – to get through the winter without shortages. But to get there will still require an unrelenting effort.”

Unpredictable events, such as damage to critical gas infrastructure in Germany or its neighbouring states or a sudden onset of extreme cold weather, could still force Müller to ask the government to announce an emergency. “Just a few days of extreme cold in January, February or March would have significant impact on our gas use.”

If such a scenario was looking inevitable, Müller’s agency would have a choice between rationing gas supply to entire German regions, to individual companies with especially high demands, or to sectors of industry it declares non-vital.

“The pharmaceuticals and parts of the food industry are especially important, because we can’t imagine a situation where we would want to forgo those,” he said. “That doesn’t apply to the entire sector, of course: Germany would probably survive for a while without chocolate biscuits. Other sectors may be vital only in part: you can’t run a hospital if you don’t have a laundry that cleans hospital gowns, for example.”

While good fortune and quick government action made Müller cautiously optimistic, he said he was less confident about predicting the situation next winter.

“Since I struggle to see there being a peace deal next year that Ukraine will find acceptable, it is unlikely that we will be able to refill our storage tanks with Russian gas next year. There is also a question of whether we will find it as easy to get our hands on LNG.

“As we manage to meet our targets, I am not so worried about this winter,” Müller said. “The winter of 23/24 is in such an uncertain future that it is hard to calculate.”

Source: The Guardian

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