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Germany's gas crisis in five charts

Stock Markets Jun 29, 2022 10:00AM ET
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© Reuters. FILE PHOTO: 3D printed Natural Gas Pipes are placed on displayed German and Russian flags in this illustration taken, January 31, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Vera Eckert and Tom Sims

FRANKFURT (Reuters) - Germany, largely dependent on Russian gas to fuel its export-led economy and to keep homes warm, is bracing for a possible total halt in Russian supplies if Moscow steps up its use of gas as an economic weapon against the West while it wages war in Ukraine.

Already down since last year, Russian gas flows slowed further through the important Nord Stream 1 pipeline this month, and Berlin has moved to the second of three stages of its supply emergency plan.

Industry executives and economists are scrambling to figure out how Europe's largest economy will fare in the coming months and beyond, and where it is especially vulnerable.

Germany is known for its cars, and its machine tools fill factories throughout China, but sectors likely to be hardest hit are also its glass and chemicals industries.

Below are five charts that illustrate Germany's exposure:

1. The Nord Stream 1 pipeline from Russia through the Baltic Sea is the most important direct gas route into Germany, and flows are already down to 40% of capacity, with Russia citing trouble with turbines and sanctions.

There is concern that a planned routine maintenance period could mean the pipeline closes for good against the background of the hostilities.

In that event, storage caverns could not be filled in time for the winter heating season, which is just three months away.

Slower flow https://graphics.reuters.com/UKRAINE-CRISIS/gdvzygajypw/chart.png

2. It's not just Germany. Gas flows to Europe are also curtailed via routes linking Russia with Slovakia, the Czech Republic and Austria via Ukraine and on another route through Belarus and Poland.

Gas to Europe https://graphics.reuters.com/UKRAINE-CRISIS/lbvgnxmaypq/chart.png

3. German industry, which includes titans like Volkswagen (ETR:VOWG_p) and Siemens, is the biggest consumer of gas, but half of all households, which heat with gas, aren't far behind.

Emergency plans say homes should be prioritised if the state is forced into rationing, alongside hospitals and essential services, but there are also calls to make households part of savings programmes.

Gas sales by customer group https://graphics.reuters.com/UKRAINE-CRISIS/lbpgnxwywvq/chart.png

4. Within the industries consuming gas for their processes, Germany's chemical sector is the biggest single consumer. According to Moody's (NYSE:MCO), BASF alone uses 4% of Germany's gas at its Ludwigshafen site.

"In a scenario of reduced gas availability, European chemicals producers could face at least two winters with tight gas supplies," Moody's Investors Service said in a research note, adding costs would go up as well.

Gas use by industry https://graphics.reuters.com/UKRAINE-CRISIS/gdpzygnaqvw/chart.png

5. In the grimmest scenario, a complete halt to Russian natural gas exports could cost Germany 12.7% of economic performance in the second half of 2022, according to the Bavarian vbw industry association. That would translate into 193 billion euros ($203 billion) in total economic losses.

Germany is famous for its cars, but the industries that stand to see their activities most curtailed by lack of gas include glass, iron and steel, ceramics, food and printing, with vast knock-on effects to other sectors.

Hardest-hit industries https://graphics.reuters.com/UKRAINE-CRISIS/egpbkgbzgvq/chart.png

Germany's gas crisis in five charts
 

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Comments (3)
Lib Can
Lib Can Jun 30, 2022 4:03AM ET
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Germany need open Nord Stream 2
Ser hh
Ser hh Jun 29, 2022 10:30AM ET
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Germany was warned as early as 2018 that it was heading towards complete dependency (political and energetic) to Russia. They dismissed it all because Steinmeier came back to Berlin proudly waving some pieces of paper signed by Putin. Well that aged well.
Gamer Turtle
GamerTurtle Jun 29, 2022 10:30AM ET
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well, not really right. it depends on perspective. If you look at this with a mirror, you can easily argue that EU as a whole is too dependent on the USA so they're in this situation. If EU doesn't pick side between US and Russia, and claim their own sovereignty, wouldn't Russia sell them more gas at much cheaper rate? lol.
Lars He
Lars He Jun 29, 2022 10:09AM ET
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Germans are infamous for selecting bad leaders
Gamer Turtle
GamerTurtle Jun 29, 2022 10:09AM ET
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You're absolutely right, cuz al their politicians work for the US. Why aren't they able to get cheap gas for their people, cuz they have to fight a political war with Russia for the US? lol. Russia is surely a bad choice for world but EU is not much better. US is the top cuz it always fight for its own national security and expansion, Russia is probably 2nd for trying to be relevant, EU is the last on the list cuz it doesn't even have sovereignty. it doesn't try to be better nor does it try to be their own super power, it's just working for the US all the time.
Yury Babich
Yury Babich Jun 29, 2022 10:09AM ET
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It is about Merkel who was a real bad leader and made a lot of ugly choises. One of them to trust Russia and relay on Russian gas
 
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