Due to the annual maintenance of Nord Stream 1, practically no Russian gas is currently flowing to Germany. What if Putin turns off the tap once the work is done? In the worst-case scenario, a current study shows, our stores are empty in January.
It is getting serious. The warnings come from all directions – from the federal government, the EU Commission, industry, housing associations. The fear is that gas will be scarce. The debate is already underway as to who needs to save more, consumers or business.
In fact, Russia, for years Germany’s most important energy supplier, has turned off the tap, at least for the time being. Nord Stream 1, Germany’s most important gas pipeline, is currently being maintained. Basically just routine. “Gas pipelines have to be serviced regularly, as does the NordStream 1 pipeline. An annual inspection is scheduled to take place here,” reports the Federal Network Agency.
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During this work, no gas flows through the line. The flow of gas from the east has practically dried up. Because even in the Bavarian Waidhaus almost no more gas arrives, as data from the Federal Network Agency show. Normally, gas from Siberia flows into the Federal Republic there via the Transgas and Central European pipelines.
So the question is: will Russia turn on the gas again once the maintenance is done? And what do we have to be prepared for if Putin wants to let us freeze, even if the Russian treasury loses billions as a result? Deutsche Bank provides the answers in a new study. The analysts outline three scenarios of how things could continue:
The gas storage facilities in the republic are currently 64.6 percent full – an average value for the month of July. This is shown by data from the Gas Infrastructure Europe (GIE) association. Between 2017 and 2021, the minimum fill level at that time was only 45 percent. At the same time, the storage facilities in July were already significantly fuller than in previous years.
Imports of Russian gas have already fallen significantly, from around 45 percent in mid-May to just around 25 percent recently, according to study author Eric Heymann, economist and expert on mobility and energy at Deutsche Bank Research. At the same time, Germany imported more gas from the Netherlands, Belgium and Norway, but this did not fully offset the loss of Russian imports.
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For the scenarios, Heymann assumes that Germany imports an average of 2,850 gigawatt hours of gas per day from its European neighbors. A high number in historical comparison, but less than the recent peak of 3000 gigawatt hours per day.
On the consumption side, Heymann expects a level that is ten percent below the previous year, driven by the frugality of private households and industry and the switch to other energy sources such as coal or wood. “Saving and the switch have already led to a drop in German gas demand by 14 percent in the first five months of the year compared to the previous year,” writes Heymann. However, this is also due to the mild winter weather, which is why the scenarios “only” assume a ten percent lower demand.
Finally, the economist notes, the role of gas re-exports should not be underestimated. In recent years, Germany has become an important transit hub for gas in the European Union (EU) – and a large proportion of German gas imports continue to flow to other EU countries. For this reason, imports in Mallnow – compressor station of the Yamal pipeline – have been at zero for quite some time. Germany is currently exporting gas from there to Poland.
“In our scenarios, we assume three different proportions of re-exports: 35, 40 and 45 percent,” says Heymann. The analysts are thus based on previous quotas. In 2021, Germany re-exported 35 percent of its gas imports, and in 2020 it was even 41 percent. For comparison: In the first months of 2022, only 33 percent of gas imports flowed on to the EU neighbors.
In this case, there are no (significant) supply problems, even with high re-exports, as long as Russia continues to deliver after maintenance of Nord Stream 1 as before. “The gas supply over the winter in Germany would then be secured,” says Heymann. Even if 45 percent of imports were to flow back to other EU countries, the reservoirs would still be ten percent full in April 2023.
If 40 percent of the gas imports were re-exported, the storage facilities would be 90 percent full by the end of October – “in accordance with legal regulations that stipulate a storage level of 90 percent by November 1st.” With a re-export quota of only 35 percent the reservoirs will still be 40 percent full by the end of winter. That would also correspond to legal guidelines that provide for such a level on February 1st.
However, should Russia halve gas deliveries again after the maintenance, everything would depend on further exports. “With a re-export of only 35 percent, supplies would be secured, even with reduced deliveries from Russia,” says Heymann. The reservoirs would then still be 15 to 20 percent full by the end of April 2023.
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But: “The picture already changes when re-exports are at 40 percent,” warns Heymann. Then the reserves would have been used up in April. Then rationing of supplies at the end of winter might be necessary. With a re-export rate of 45 percent, the storage facilities would be completely empty by March 2023.
“Welcome to a winter of gas rationing”: If Russia uses the maintenance to completely stop the gas supply to the Federal Republic, Germany can no longer avoid rationing in the winter months, says Heymann. Even if only 35 percent of imports were re-exported, storage would be almost zero by March 2023.
If Germany were to forward 45 percent of its gas imports, the reserves would be used up by January 2023. Deutsche Bank economist Heymann notes, however, that such a re-export quota is significantly higher than the level of the past few months.
Because private households and critical infrastructure have the highest priority in the event of a gas shortage, industry would be hit hardest in this scenario. According to Heymann, the government, large individual consumers and trade associations are currently discussing which locations the gas could be turned off first. We can expect more details on the debate in September, says Heymann. Then the Federal Network Agency wants to publish a new report on Germany’s interconnectivity in gas supply.
