Germany and Austria Begin Gas Rationing Amid Russian Payment Crisis

Construction of the NEL pipeline, which connects the Russian-German Nord Stream with other gas pipelines (Creative Commons).

The governments of Austria and Germany announced their plans to start rationing gas on March 30. These efforts come in response to Russian demands to switch payments from euros to rubles. Although the European Union (EU) originally planned an agreement with the United States to gradually decrease European dependence on Russian gas over the next decade, the Kremlin’s desperation to inflate the ruble hastened the process towards energy independence. 

Concerns began when Russian President Vladimir Putin ordered the state-owned Gazprom to redraw contracts with EU member states and rewrite their terms of payment. The Russian government has heralded this decision as a direct response to “unfriendly” states who have expressed their condemnation of the Russian invasion of Ukraine. 

Germany’s economic minister, Robert Habeck, has declared the formation of a crisis group and the decision to move Germany into an “early warning” phase of gas rationing which the Austrian government directly followed. Depending on the severity of the crisis, gas supply disruptions in EU member states are classified in three different designations, the first of which an “early warning.” A March 2022 report from CNBC explains that this enforcement structure follows early warning with alert and emergency categories. Austria and Germany have declared an early warning, which only maintains that gas companies participate in information sharing with concerned authorities. Alternatively, an emergency would give governments the authority to curtail gas usage unless absolutely necessary. This allows essential recipients, such as  hospitals and households, to gain priority status in case of an emergency. 

Germany and Austria are particularly dependent on Russian gas. In fact, Russian gas supplied to German pipelines comprises 55 percent of its oil supply, which dropped to 40 percent after the first fiscal quarter of 2022 following the Russian invasion. With the cancellation of the Nord Stream 2 Pipeline, this decrease continues the difficulty of maintaining German energy independence. Furthermore, gas supplied from Russia makes up even more of Austria’s gas supply, at a staggering 80 percent. The Austrian government has confirmed that its national gas tanks are 13 percent full as of right now and gas imports continue to flow in despite the disagreement. Germany currently sits at approximately 26 percent capacity, based on data from Gas Infrastructure Europe.

European states have roughly a month before the new Russian contracts go into effect and payments in rubles become mandatory. As April payments for gas imports have been made and are to be delivered soon, officials are focused on what to do when it comes time for them to pay for May imports. On March 28, Putin had advised that European states have a week-long period before they must agree to carry out payments in rubles, rather than “compromised currencies.” Uniquely, Slovakia, a state with a Russian gas dependence of 85 percent that is comparable to Austria, was one state which announced its intentions to begin negotiations with new ruble-based terms. 

Gas rationing remains in its most premature stages despite concerns of its consequences in Germany and Austria. The two states remain strong in their refusal to concede their path to energy independence to the Kremlin. For now, governments continue to collect data on levels of gas capacity and consumption until preemptive measures must be taken.