Russian gas supply cut? We have no solution for that, says Czech industry deputy minister

Pipelines of the national natural gas distribution network outside Ungheni, Moldova, March 4, 2015. (AP Photo/Aurel Obreja)
By Karolina Klaskova
4 Min Read

If Russia stopped gas supplies immediately, the situation would have virtually no solution, Deputy Minister of Industry and Trade René Neděla told security committee members on Thursday.

According to Neděla, about 2 percent of the total domestic gas consumption is mined in the Czech Republic. The rest is almost exclusively Russian gas.

According to Neděla, a large part of Europe would have a problem, as 44 percent of gas consumption flows to the EU from Russia. As he noted, the only possible action would be the joint purchase of gas within the EU and its proportional distribution among member states.

Restoring operations in decommissioned coal-fired power plants could be also a solution, Neděla expressed. He can imagine an agreement with their owners to supply this electricity directly to the most vulnerable groups, so they would not sell it through the stock exchange. However, according to the deputy, the putting the power plants back online would not be simple.

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Neděla also considers investments in photovoltaic power plants on the roofs of houses to be a solution, but he indicated that Czechia is facing a shortage of materials and installation companies to make such a move truly feasible.

On Sunday, he stated that the state could not buy gas reserves because they would cost about 150 billion korunas (€6 billion) and would not even cover the country’s entire consumption. According to the deputy minister, the possibility is to create an incentive regime for traders who would buy the quantity required by the state. If they bought less gas, the rest could then be purchased directly by the state, or an entity the state trusts.

On Thursday, Russian President Vladimir Putin signed a decree, according to which Russia will no longer accept euros or dollars for gas intended for Europe from Friday, demanding payments in rubles instead. The state gas company Gazprom has been ordered to adjust supply contracts. Czech gas suppliers have previously stated that the measure will not jeopardize supply because they buy gas on European wholesale markets or at virtual points of sale from various large energy suppliers.

Putin announced that if payments were not realized, gas supply contracts would be suspended. French Finance Minister Bruno Le Maire and German Economy Minister Robert Habeck have rejected Putin’s claim, saying it was an unacceptable breach of contract and extortion. According to the ministers, both countries are preparing to stop gas supplies from Russia, but some experts are warning of a catastrophic scenario if such a gas stoppage were to occur.

German Chancellor Olaf Scholz and his Austrian counterpart Karel Nehammer later said at a press conference in Berlin that they refused to pay for Russian gas supplies in rubles. Scholz added that he had already told Russian President Putin in a telephone conversation and that it was now up to the head of the Kremlin to act. Both Scholz and Nehammer said they agreed that the existing contract meant gas could only be bought in euros.

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