Germany set out a plan to limit gas prices for homes and businesses that will need €200 billion ($195 billion) of borrowing, a move that risks keeping consumption high as shortages loom this winter.

Households aren’t yet listening to calls to use less gas with the country’s network regulator warning earlier that consumption was higher than usual over the past week as temperatures dropped. Savings of at least 20% are needed to avert a shortage of fuel this winter. 

Gas is still leaking from the damaged Nord Stream pipelines as nations step up security at critical energy infrastructure to prevent further potential sabotage. The fuel has been bubbling up from the pipelines since earlier this week, with Denmark estimating that the links would empty by Sunday. Detailed surveys of the damage can only be carried out once the gas has stopped leaking.

Key Developments:

  • Germany will need to borrow €200 billion to fund gas bill discount
  • German regulator warns gas use needs to fall at least 20% to avoid shortage
  • Finland says only a state actor is capable of Nord Stream sabotage
  • Nord Stream pipelines have four leaks
  • Gas futures decline after a two-day rally

Try Your Hand at the Policy Levers: How Would You Manage the Energy Crisis?

(All times are UK.)

UK Authorities Discussing Increased Vigilance of Assets (4:56 p.m.)

UK authorities and energy asset operators are “engaged” in discussions over whether extra security measures are needed at facilities including pipelines, according to Offshore Energies UK, Britain’s main lobby group for the oil and gas industry.

Britain’s offshore facilities already have well-tested security arrangements, but it’s sensible to see if there’s “anything else we could and should be doing to be prepared from a physical security perspective,” Mark Wilson, OEUK operations director, told reporters on Thursday.

UK Becomes Net Electricity Exporter (4:46 p.m.)

The UK exported more power than it imported during the second quarter of the year for the first time since 2010. The volume both of electricity and gas leaving the UK jumped nearly 600% in the three months to June this year compared to the previous year, according to UK government data.

It’s unclear whether such high volumes of exports can be sustained. There’s likely to be rising demand within the UK as it gets dark and cold, meaning some flows out of the country may have to be curtailed when supplies get tight.

RWE to Restart Three Idled Lignite Plants (2:55 p.m.)

RWE AG will bring back three lignite-fired power plants that had been on standby in October, the company said in a statement.

Germany plans to rely more on coal and lignite this winter to help keep the lights on and reduce gas use in electricity generation.

Algeria Locks In Higher Gas Price Deals (2:50 p.m)

Algeria will benefit from higher natural gas prices as it locks in deals with two European Union nations anxious to secure enough natural gas supplies for the coming winter.

State-controlled Algerian energy producer Sonatrach Group concluded a deal with Italy’s Enel SpA on Wednesday and said it will soon announce one with Naturgy Energy Group SA, ending a months-long stalemate with the Spanish utility over contractual price revisions.  

Emir of Qatar to Meet European Leaders Next Week (2:30 p.m.)

Qatar’s ruler plans to attend an informal gathering of European leaders in Prague on Oct. 6, where he will also have the chance to hold bilateral meetings with some of the leaders, according to a person familiar with the matter.

Sheikh Tamim bin Hamad Al Thani’s trip comes as European countries have been jockeying to sign deals with Qatar to access more of its LNG exports.

Germany Pushes Uniper to Get Rid of Russian Assets (1:50 p.m.)

Germany risks being left holding 2.2 billion euros of unsellable Russian energy assets when it takes over Uniper SE at the end of the year.

The government may have no choice but to give up the assets. Even if a sale were possible, President Vladimir Putin has made it almost impossible for international energy companies to secure big financial gains when they exit Russia.

Germany to help with Gas Bills (1:35 p.m.)

The German Chancellor Olaf Scholz set out a plan to limit the impact of soaring gas bills for households and businesses. The measure will be financed by redeploying a fund created to help offset the impact of the coronavirus pandemic and bolstered by €200 billion of borrowing.

Germany is especially vulnerable to the surge in energy costs triggered by the war in Ukraine due to a heavy reliance on imports of Russian gas. 

Repairing Nord Stream To Be Challenging (12:30 p.m.)

Repair works at approximately 70 meters of water depth will be “a technical challenge”, said Gerald Linke, chairman of Germany’s gas and water association DVGW. Works are carried out in submersible diving bells that are lowered over the pipeline. 

Water may enter the pipeline, depending on the size of the leak and the topography of the pipeline, Linke said. To take water out, overpressure needs to be applied or water could be forced back by so-called pigs, a piece of equipment with a special pushing device. Pigs are also used to tightly close the two pipeline strings to the left and right of the damaged site.

Europe Looking at How to Increase Protections (12:15 p.m.)

The European Commission says it’s supporting the national authorities conducting the investigation into the leaks from the Nord Stream pipelines, the EU executive’s spokesperson Dana Spinant said at a briefing on Thursday. Brussels is also working with member states to see how to increase protection and resilience of the infrastructure.

Finland Boosts Gas Pipeline Security (11:58 a.m.)

Finland’s network operator Gasgrid has increased security around the Balticconnector pipeline, which connects the Nordic country with Estonia, Finance Minister Annika Saarikko told reporters Thursday.

The attacks on the Nord Stream pipelines earlier this week highlight Finland’s need to ensure it’s sufficiently prepared against threats to critical infrastructure, Saarikko said following a meeting of the cabinet’s preparedness group.

Europe’s Industry Pleads for More Help (11:26 a.m.)

“More immediate and efficient measures” are needed to solve the energy crisis in Europe, trade groups representing energy-intensive industries from fertilizer to glass-making said in a joint statement. Many sectors are suffering plant shutdowns and layoffs as gas prices hold at “unbearable” levels, they said, and called for electricity prices to be disconnected from gas prices.

Germany Nears Deal on Gas Levy Substitute (10:45 a.m.)

Germany’s coalition parties are close to a deal on introducing a so-called gas-price brake as an alternative to a planned levy on consumers, Handelsblatt reported, citing unidentified people familiar with the talks. The government will earmark about 150 billion to 200 billion euros to cover the cost of the price cap, to be funded through the Economic Stabilization Fund that was originally created to address the impact of the Covid pandemic.

NATO Promised ‘Determined’ Response (10:42 a.m.)

NATO allies warned any deliberate attack against allies’ infrastructure would be met with a “united and determined response” following the gas pipeline leaks in the Baltic Sea.

In a joint statement, the North Atlantic Council echoed other officials, saying information currently indicates the leaks are the result of “deliberate, reckless and irresponsible acts of sabotage.” They added they are committed to defending against any “coercive use of energy or hybrid tactics by state and non-state actors.”

Even as Poland has blamed Russia for the damage, the NATO statement refrained from naming any names as a joint investigation by Denmark, Sweden and Germany is underway.

German Regulator Warns of Gas Shortage (11 a.m.)

Germany’s network regulator said gas demand was well above average last week as temperatures fell and said savings of at least 20% are needed to avert a shortage this winter.

“This week’s numbers are very sobering,” Klaus Mueller, president of the Bundesnetzagentur, said in an emailed statement, adding that consumption data provide only a “snapshot” and the situation can quickly change. “Savings must also be made when temperatures continue to fall,” he added. The agency said that gas consumption needs to decline by “at least 20%” to prevent a shortage.

Sweden Says Exact Leak Locations Not Known (9:36 a.m.)

Sweden’s Coast Guard became aware of two leaks in the pipelines in Sweden’s exclusive economic zone at the same time as they learned of two in Denmark on September 26, communicating it on their website, according to a spokesman reached by phone. It isn’t known which parts of the pipelines the leaks are in, he said.

Greece to Get LNG From TotalEnergies (9:08 a.m.)

Greece’s Public Gas Corporation of Greece AE has agreed to a deal for the supply of two liquefied natural gas carriers a month for the next five months from November 2022 to March 2023, the country’s Energy Ministry said in an emailed statement.

Gas Prices Drop (8:00 a.m.)

European natural gas prices declined as much as 5.4% on Thursday after two days of gains as tensions between Russia and the continent threatened further derailment of gas supplies.

Warmer weather from next week is likely to delay heating demand, bringing some relief to prices.

EU Gas Cap Could Push Up Prices (7:30 p.m. Wednesday)

Capping natural gas prices, a move urged by more than half of member states seeking to quickly contain the crisis risks increasing demand for the fuel rather than addressing its scarcity if imposed in isolation, the European Commission said in a document seen by Bloomberg News.

To be effective, an intervention in the gas market should limit the influence of Russia’s manipulation of pipeline supplies and reduce Moscow’s revenues, bring down the price of imported gas for consumers and cut excessive price volatility, according to the commission. The document will be discussed by energy ministers meeting in Brussels on Friday.