Germany issues ‘early warning’ of possible gas shortages as Russia threatens

London (CNN Business)Germany has issued an “early warning” of possible natural gas shortages after Russia said it wanted to be paid in rubles, rather than dollars or euros, and threatened to cut off supplies if that didn’t happen.The German government said Wednesday that the country had enough gas for now, but it urged all consumers across Europe’s biggest economy — from companies to hospitals and households — to reduce their use as far as possible with immediate effect.”There are currently no supply shortages,” Economy Minister Robert Habeck said in a statement. “Nevertheless, we must take further precautionary measures to be prepared for any escalation by Russia.”

German gas storage is currently filled to 25% capacity, he added.

Klaus Mueller, head of Germany’s energy market regulator, said in a tweet that the alert was aimed at avoiding a deterioration in gas supplies and said consumers should be prepared for “all scenarios.”The European Union depends on Russia for about 40% of its natural gas, and Germany is Moscow’s biggest energy customer on the continent. EU sanctions imposed on Russia over its invasion of Ukraine include a ban on new investment in energy projects but do not target oil and gas exports.

Habeck said this week that payment in rubles is not acceptable to Berlin — a position backed by other G7 economies — and he has described Russian President Vladimir Putin’s demand as “blackmail.”

Putin has given Russia’s central bank and Gazprom, the state gas company, until Thursday to come up with proposals for accepting payments in rubles, rather than US dollars or euros as agreed in supply contracts.With the sanctioned Russian central bank banned from swapping euros and dollars for rubles, Moscow is trying to find a new stream of cash it can spend easily.

Putin could “directly finance the war, the army, the supply of the soldiers, the supply of gasoline for the tanks and the construction of weapons in his own country” with rubles, Habeck said Monday.The European Union is planning to slash consumption of Russian natural gas this year by as much as 66% as it prepares for a complete break with its single biggest energy supplier. But Europe would struggle to survive for long without Russian gas, and finding alternative sources presents a huge logistical challenge. A recession would be all but assured if Putin cuts off supplies.The “early warning” is the first of three alert levels set out in Germany’s emergency gas plan. If the situation deteriorates, the government would declare an “alarm,” followed by an “emergency.”

Habeck said a crisis team of experts from government, regulators, gas network operators and Germany’s 16 federal states had been convened to monitor the situation closely and take measures “to increase supply security” if necessary.

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