Berlin faces €5bn hit replacing Kremlin gas

Germany has been forced to turn to international markets following Russia’s invasion of Ukraine

GERMANY is facing a bill of up to €5bn (£4.3bn) from buying gas on the international markets after Russia enforced retaliatory sanctions against the eurozone’s biggest economy.

Russia stopped supplying Gazprom Germania, a subsidiary of the Kremlin’s state-owned energy giant, in May after Berlin placed the company under government control. Since then Germany’s energy regulator has been forced to buy replacement gas on the market – estimated at around 10m cubic metres (353m cubic feet) per day – to fulfil contracts with utility firms.

The current cost is set to hit €3.5bn a year, with further costs of up to €1.5bn arising from the filling of the Rehden natural gas storage facility, the Welt am Sonntag reported.

The newspaper added that the additional costs would be passed on to energy suppliers and customers in the form of a gas levy from October.

Germany, which relied on Russia for 55pc of its gas last year, has been forced to launch an emergency plan amid fears Vladimir Putin could turn off the taps. EU countries have been securing gas from areas such as Africa, Qatar and the US, but it remains uncertain to what extent the Continent could cope without any Russian supplies.

Robert Habeck, Germany’s economy minister, has said his country could cope without Russian gas from this win- ter, but admitted it would not achieve full independence before mid-2024.

The German government last week ordered the refilling of the Rehden facility – its largest gas storage centre – in a bid to shore up supplies.

The new laws require gas stores, which had been at a historic low of just 2pc, to reach 80pc by October. Regulators have also started drawing up plans to ration gas to businesses in the event of a full Russian cut-off.

Bundesnetzagentur, the country’s energy regulator, admitted it could be forced to “cut supply of gas to some users to zero”, depending on the extent of any shortages.

Europe’s gas market has been locked in a crisis since Putin demanded that all buyers pay for gas in roubles.

The European Commission has said member states can comply with the order without breaching sanctions as long as they do not open rouble accounts at Russian lenders. But Moscow has started turning off the taps to the Continent as the row intensifies. Last week, Gazprom cut flows to the Netherlands after previously doing the same to Poland, Finland and Bulgaria. It also halted supplies to Shell in Germany and Orsted in Denmark.

While Britain gets less than 4pc of its gas from Russia, the escalating crisis in Europe is driving concerns of a knockon effect in the UK market. It comes after the EU reached an agreement to cut the majority of oil imports from Russia after weeks of wrangling by member states. The compromise means the bloc will cut down its supplies from Moscow by two thirds immediately, rising to 90pc by the end of the year.

Flows through the Druzhba pipeline – which supplies Hungary, the Czech Republic and Slovakia – will be exempt from the embargo.

The EU has faced criticism for failing to do enough to sanction Russia, while sources within the bloc accused Germany of deliberately watering down the measures to benefit its own economy.