European Union Preps for Gas Rationing over Russian Shutdown Fears

LUBMIN, GERMANY - FEBRUARY 02: A map shows the course of the Nord Stream 2 gas pipeline fr
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Gas rationing in Europe may be coming down the pike should Vladimir Putin follow through on his threat to cut off supplies to those who refuse to pay Russia in rubbles, the European Union’s energy commissioner has warned.

This week, the EU has announced that it is crafting contingency plans, including rationing gas in the coming months in the event of a complete shut down of Russian gas shipments to the bloc. As many have already warned, a shortage of gas could be devastating to major European economies like Germany, which rely on abundant, cheap energy to function.

“We are facing a situation that any member state might be the next one [to be cut off],” Energy Commissioner Kadri Simson told the Financial Times. “So far we have been able to take care of the security of supply concerns of these three member states [who have already been cut off], mainly with the help of the solidarity of neighbours.”

“This year if there will be full disruption, we are preparing contingency plans,” the Estonian politician added.

Three European countries, including Bulgaria, Finland, and Poland have all had liquid natural gas (LNG) pipeline shipments cut off by Russia’s state-owned Gazprom for failing to abide by President Vladimir Putin’s demand to pay Moscow rubles in exchange for gas.

While the Russian currency initially faltered following unprecedented sanctions levied by the United States, United Kingdom and the European Union, the ruble has since stabilised, with European gas payments likely serving to bolster its value.

The EU’s rationing of gas would likely specifically target industry, according to FT, in order to spare individual households bearing the brunt of any shut down. Key sectors, such as food, chemicals, ceramics, and glass producers would also likely be exempt from any rationing scheme.

At present, businesses account for around 27 per cent of gas usage within the European Union. Some industries, in Italy and Germany for example, have already indicated that they would be willing to pay Russia in rubles, however, there are questions as to the legality of such a move in light of Western sanctions on Russia’s central bank, though workarounds the bank have been proposed.

Simson claimed that the bloc would be able to replace around two-thirds of the amount of Russian gas used with alternatives from foreign countries by the end of the year, with the EU already claiming to have reduced Russian gas imports from 40 to 26 per cent of its foreign consumption.

Individual countries, notably Germany — which is one of the more heavily dependent on Russian gas — have reportedly been making preparations for the need to ration gas.

Some leaders, including Italian Prime Minister Mario Draghi has also urged the public to cut back on their energy consumption, telling the Italian people in April that they may have to choose between “peace or air conditioners”.

Follow Kurt Zindulka on Twitter here @KurtZindulka


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