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ENERGY

Germany, Russia to launch Nord Stream

The leaders of Germany and Russia will inaugurate the controversial Nord Stream pipeline pumping Russian gas to Western Europe on Tuesday, highlighting its strategic importance to both sides.

Germany, Russia to launch Nord Stream
Photo: DPA

Angela Merkel and Dmitry Medvedev will headline a guest list including the prime ministers of France and the Netherlands, Francois Fillon and Mark Rutte, and EU energy commissioner Günther Oettinger to mark the first of controversial gas links under the Baltic Sea.

The ceremony in the northeastern German town of Lubmin will celebrate the arrival of the first Russian gas through the 1,224-kilometre-long (761 miles) pipeline into the European grid.

Once operational in late 2012, it will transport 55 billion cubic metres (1.9 trillion cubic feet) of gas a year to the EU for at least half a century, enough to supply around 26 million homes, Nord Stream says.

The consortium for the €7.4 billion ($10.2 billion) project is a joint venture between the Russian state-held gas giant Gazprom, German firms BASF and EON, Dutch company Gasunie and GDF Suez of France.

Russia loaded the first gas into the link in September and aims to use it to reduce its dependence on Ukraine and other transit nations where there have been pricing disputes that have in some cases disrupted delivery to Europe.

However, the project has been hotly contested since then Russian president Vladimir Putin and former German chancellor Gerhard Schröder presided over the signing in 2005. Schröder is now chairman of Nord Stream’s supervisory board.

Poland and the Baltic states have long voiced fears over the project, which bypasses their territory, arguing they will be on their own when bargaining with Russia for their own gas supplies.

Sweden has raised ecological objections to the massive seabed pipeline, which Gazprom has brushed aside.

“There had been concerns among some but good sense prevailed,” Russia’s ambassador to Germany, Vladimir Grinin, told AFP.

“Germany’s recent decision to abandon nuclear energy, which means that it will have a bigger need for gas in the medium-term, has led many to see more clearly.”

Germany this year decided to shut down all of its nuclear power plants by the end of 2022 in reaction to the disaster in March at Japan’s Fukushima facility.

Critics say the Kremlin uses Russia’s bountiful energy supplies as a strategic weapon to assert its political dominance.

Nord Stream is becoming operational just as the EU re-assesses its own reliance on Russia – currently supplier of more than a quarter of Europe’s gas – as its primary energy source.

A Nord Stream spokesman insisted Europe had nothing to fear. “That share (about 25 percent) will not change significantly when this is up and running because consumption is rising at the same time. We may reach around 30 percent,” said Jens D. Müller.

An energy expert at Germany’s DIW economic institute, Claudia Kemfert, said it would nevertheless be “wise for the West to diversify.”

“There is a gas surplus in the world – why fixate on Russia?” she asked, noting the market role to be played by liquefied natural gas.

However, the debate has been coloured by Gazprom’s mounting influence, particularly in Germany, where it owns a first-division football club and is in talks with RWE about intensifying cooperation.

RWE is involved in a competing pipeline project to Nord Stream – Nabucco – which is backed by the European Union and the United States. The route it would take, from the Caspian Sea via Turkey and eastern Europe, bypasses both Russia and Ukraine.

“The Nabucco project is already running into trouble, and closer ties between RWE and Gazprom would further decrease its chances,” Kemfert said.

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ENERGY

German households to receive relief for gas costs ‘starting in January’

To help German residents with skyrocketing energy costs, the government is planning to provide relief starting in January, according to draft legislation.

German households to receive relief for gas costs 'starting in January'

Through the gas price cap, the so-called Gaspreisbremse, both German residents and companies will receive retrospective relief for their gas costs starting in January 2023, according to the draft. 

Previously the relief payments were set to stretch between March 2023 and spring 2024, with 25,000 larger businesses, as well as almost 2,000 hospitals and schools to receive the help starting in January. 

READ ALSO: How much could households save under Germany’s new price cap?

The German government is reacting to the sharp rise in energy prices with energy price brakes worth billions and wants to soften the blow on both private households and companies. 

Germany will also be divvying out a one-off energy relief payment in December.

READ ALSO: When will people in Germany get their December gas bill payment?

How much will households and businesses receive?

Under the gas price cap, households and small and medium-sized enterprises are to receive a guaranteed gas gross price of 12 cents per kilowatt hour for 80 percent of their current consumption. For the remaining 20 percent of consumption, the contract price is set to apply.

For district heating, the guaranteed gross price is to be capped at 9.5 cents. 

Starting in January, a gas price brake is also planned for industry. These large consumers are to receive a guaranteed price of 7 cents per kilowatt hour net for 70 percent of their previous consumption volume.

The largest part of the energy price brake is to be financed by a “defence umbrella”, or special reserve, totalling up to €200 billion. The government is still taking on new debt in order to finance the energy caps. 

Russia’s war against Ukraine has increasingly aggravated the situation on the energy markets in Germany and Europe in the course of 2022, the draft states. 

In particular, the recent large price increases for natural gas and heat represent a “considerable, in some cases existence-threatening burden for residents and companies in Germany,” it continued. “They are an enormous socio-political and economic challenge.”

Vocabulary

relief – (die) Entlastung

Natural gas – (das) Erdgas

Consumption – (der) Verbrauch

cushion/soften a blow – abfedern

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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