As German gas rationing looms, industry calls for exemptions

A view shows pipes at the landing facilities of the ‘Nord Stream 1’ gas pipeline in Lubmin, Germany, July 21, 2022. REUTERS/Annegret Hilse//File Photo

DUESSELDORF/FRANKFURT, Germany, Aug 9 (Reuters) – Germany’s grid regulator, which would be in charge of gas rationing in the event of a supply emergency, has received dozens of requests for exemption from across the industry, reflecting fears of possible production cuts and losses.

Germany is in phase two of a three-step contingency plan following a reduction in gas flows from Russia, its main supplier, a major problem for the industry, which accounts for a quarter of demand for country gas.

Chancellor Olaf Scholz said on Tuesday that gas prices, which have soared due to uncertainty over Russian supplies, will not come down quickly as governments around the world see fuel as a bridge on their decarbonization path. .

As industry and regulators try to come up with a plan for what happens in phase three – when rationing comes into effect – individual sectors have started to seek leniency and some companies have started to change the practices of work to reduce energy consumption.

“An application procedure is not planned. The Federal Network Agency continues to receive many letters from virtually all sectors,” a spokesperson for the German network regulator (BNetzA) said in email statements. .

“Blanket exemptions are not provided for in current law,” the spokesperson said, adding that the regulator was maintaining “constant dialogue” with industry to prepare for a gas supply emergency.

The major gas-consuming sectors that have made their voices heard publicly are the glass, steel, pharmaceutical and chemical industries, where gas is used to manufacture everything from plastics and fertilizers to fibers and solvents.

Around 120 BNetzA employees work on crisis prevention and management.

Russia’s Gazprom (GAZP.MM) is providing 20% ​​of the usual capacity of the Nord Stream 1 gas pipeline, which normally carries around a third of Russia’s gas exports to Europe, in an energy stalemate rooted in the invasion of Ukraine by Moscow.

The regulator has started collecting data from Germany’s biggest industry players, an effort it says has attracted a “very high” level of participation from 2,750 companies.

The BNetzA said it was trying to compile a list of closures for the industry based on six criteria, which include the size of a business, the economic damage as well as the costs and time it would take to restart. specific facilities.

“Everyone now knows how serious the situation is,” said Alexander Theusner of law firm Roedl & Partner, who advised the clients to draft the letters.

In the event of a crisis, private households will have priority, but not total, over industry, while hospitals, care facilities and other public sector institutions with special needs would be the last to be disrupted.

Reporting by Tom Kaeckenhoff, Vera Eckert and Christoph Steitz; Additional reporting by Andreas Rinke; Editing by Barbara Lewis, Mark Potter and Emelia Sithole-Matarise

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