Germany's Scholz urges unity to ease winter energy pain

© Reuters. FILE PHOTO: German Chancellor Olaf Scholz (on screen), Economics Minister Robert Habeck and Finance Minister Christian Lindner attend a news conference about how to handle high gas prices, at the Chancellery in Berlin, September 29, 2022. REUTERS/Lisi Nie

By Rachel More and Paul Carrel

BERLIN (Reuters) - Germany can weather a winter energy shortage caused by Russia's invasion of Ukraine provided companies and households pull together, the German chancellor said on Tuesday before European Union ministers meet again on the energy crisis.

EU energy ministers will gather in Prague ahead of a meeting on Wednesday to try to make progress on a price cap and other measures in response to the sharp reduction of Russian supplies that once provided Europe with about 40% of its gas needs.

Talks have failed to produce agreement on a proposed price cap, with Germany, Europe's largest economy, and some other wealthier EU states fearing it could make it harder to source supplies.

Germany's planned heavy spending to shield its citizens from the full impact of rising energy prices has also caused unease among some countries in the 27-nation EU that say it is more than poorer members can afford.

Chancellor Olaf Scholz said on Tuesday that Germany could not expect energy deliveries from Russia for the foreseeable future but that the situation could be managed.

"If we all continue to adapt to the changed situation - the citizens, the companies and the politicians - then we will get safely through this winter," Scholz told an engineering conference.

Scholz added that Germany, which had relied more heavily than most European states on Russia gas and has been racing to find alternative sources, had almost hit a target of having its gas storage facilities 95% full before the onset of winter.

Other European countries once dependent on Russia gas, such as Italy, have also been building up storage and sourcing supplies from other countries including Algeria and Azerbaijan.

WINTER FEARS

Analysts put the gas shortfall at almost 15% of average European demand in winter, meaning the continent has to cut consumption to get through the peak heating season without risking power cuts or rationing.

Russia progressively reduced gas flows through Nord Stream and also via other routes after Western sanctions in response to the Ukraine war that began in February.

Gas via Nord Stream stopped completely in September and any hope of resuming shipments to Germany through that route was dashed last month by suspected sabotage.

The energy crisis has also had a knock-on effect on the economy, driving up prices for businesses and reducing the amount of money that consumers have to spend.

British shoppers are stocking up on electric blankets, candles and energy-efficient slow cookers as surging gas bills and record food price inflation force millions of people to prepare for a tough winter ahead.

Berlin said on Monday it was working to implement proposals to give households and small and medium-sized businesses a one-off payment worth one month's gas bill this year and a mechanism to limit prices from March.

If adopted, the plan would be paid for by a 200 billion euro ($194 billion) relief package Chancellor Scholz's government announced last month to reduce the impact of energy prices.

($1 = 1.0305 euros)