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FRANKFURT, July 11 (Reuters) – Germany, the world’s fourth-biggest economic system, is getting ready for all situations together with a whole cease to Russian fuel provides as soon as a daily 10-day upkeep interval on the large Nord Stream 1 pipeline ends.
Upkeep on the pipeline, which carries Russian fuel instantly into Germany, started on July 11 however Berlin is factoring in fuel being utilized by the Kremlin to exert political stress on the West, one thing denied by Moscow. learn extra
Listed here are among the dangers ought to the outage interval last more or the pipeline reopen with decreased flows.
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WHY IS NORD STREAM 1 SO CRUCIAL?
It’s the greatest single route for Russian fuel into Germany, bringing 55 billion cubic metres (bcm) a 12 months. Germany consumed 100 bcm final 12 months.
Russian fuel transits by way of Poland have stopped this 12 months and people by way of Ukraine have been curtailed by the battle.
Half of German households depend on fuel heating, notably from October by way of March and failure to reopen Nord Stream 1 would scupper plans to fill underground fuel storage earlier than winter.
The caverns might in concept meet nationwide demand for 2-1/2 months, however are solely 64.6% full, in contrast with an Oct. 1 goal of 80%.
In the meantime, the marketplace for various fuel origins is tight worldwide and costs have soared since final 12 months as demand recovers after the pandemic.
HOW AND WHEN WOULD GERMANY LIMIT GAS TO CONSUMERS?
If Germany pulls the set off on the emergency section of a three-stage escalation plan, the Bundesnetzagentur community regulator can be tasked with making certain that fuel is distributed pretty.
The stage can be triggered by exceptionally excessive demand for fuel or a big disruption to provide, for instance if Nord Stream 1 was to stay closed.
Germany has been in stage two since June 23 after Nord Stream 1 volumes dropped to 40% of capability. learn extra
WHICH SECTORS ARE MOST AT RISK?
Chemical, metal, glass and paper producers are Germany’s main industrial fuel shoppers, however results would ripple so far as meals and porcelain manufacturing. learn extra
The aluminium trade, with gross sales of twenty-two billion euros and 60,000 staff, depends on fuel for melting and recycling.
Within the paper trade, with a turnover of 15.5 billion euros and 40,000 staff, operators say paper and cardboard are important for meals, medicines and hygiene articles.
WHAT ARE COMPANIES DOING?
Germany’s greatest fuel importer Uniper (UN01.DE) has requested for a authorities bailout {that a} political supply stated runs to 9 billion euros, and different utilities might face related issues. learn extra
Main steelmaker Thyssenkrupp (TKAG.DE) is drawing up plans for disruptions, based on a spokesperson, as utilizing oil or coal as an alternative of fuel will not be attainable. Ought to sure minimal allocations be denied, Thyssenkrupp vegetation could have to shut and technical injury to aggregates is feasible.
Slicing fuel provide to aluminium vegetation by even 30% would imply half of them would stand idle, trade group Aluminium Deutschland says. Outstanding gamers are Hydro Aluminium, Speira and Trimet.
Chemical compounds large BASF (BASFn.DE) wants to keep up fuel provides of round 50% of its most demand and a halt to Russian flows would set off a company-wide emergency plan.
Main paper corporations are Stora Enso (STERV.HE), UPM and Mitsubishi Hitec Paper Europe.
WHAT COULD HAPPEN TO THE ECONOMY?
Within the grimmest prediction so far, the Bavarian vbw trade group stated the nation might lose 12.7% of its financial efficiency within the second half of 2022 within the occasion of a whole halt to Russian fuel provides. learn extra
WHAT ARE THE SOCIO-POLITICAL RISKS?
Social strife over fuel might make stronger populists on the far proper and much left of the political spectrum, doubtlessly eroding rational discourse on the best way to proceed.
Berlin has authorised a legislation holding open choices to go on sky-high costs instantly, or alternatively search to distribute hikes extra typically amongst customers. learn extra
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Reporting by Vera Eckert and Tom Kaeckenhoff, further reporting Patricia Weiss, Ludwig Burger, Christoph Steitz, Tom Sims, Hakan Ersen, modifying by Kirsten Donovan
Our Requirements: The Thomson Reuters Belief Rules.
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