Germany's largest gas storage facility has shut down

The Rheden underground storage facility, one of the largest in Europe and the largest in Germany, has stopped filling and pumping gas since April 1st. This is shown by the data of Gas Infrastructure Europe – GIE, quoted by TASS and BTA.

The 4.2 billion cubic meter storage facility has been closed since the beginning of April and has been active in both directions until then. It is currently only 0.51 percent full. The operator of the gas storage is the German company Astora, which is a subsidiary of Gazprom Germania.

Earlier, it was reported that the Russian monopoly Gazprom had terminated its participation in Gazprom Germany and its assets as of March 31. As of March 31, the holding no longer belongs to the St. Petersburg-registered subsidiary Gazprom Export Business Services, which in turn is the sole founder of Gazprom Germany, the company said in a statement.

On April 4, the German Ministry of Economy and Climate handed over Gazprom Germany under the auspices of the Federal Grid Agency until September 30.

Gazprom, together with foreign partners, has implemented projects for eight underground gas storage facilities in Europe. The Reden, Jemgum, Etzel warehouses in Germany and part of the Austrian Heidach were managed by Gazprom Germany and its subsidiaries, the capital of which the Russian holding came out in late March.

With the decree on payment in rubles for gas supplies, Putin tried to artificially raise the ruble

With a March 31 ruble to pay for gas supplies, President Putin sought to artificially raise the exchange rate after rendering it unusable for investors and savers by raising interest rates, capital controls, and restrictions on buying and selling. These attempts have helped the ruble, and the exchange rate is no longer following the fundamental changes in the business environment and has separated from the Russian economy, which is expected to shrink by more than 10% this year due to sanctions

There is logic in Putin’s attempts. Numerous studies show that the prices of traded goods do not change with the change in the exchange rate and foreign buyers pay more when the exchange rate increases. However, according to an IMF study, commodities traded are in line with dollar fluctuations, even when neither country uses the dollar in its bilateral trade.

That is why paying in rubles for the minerals that Russia exports are pointless. Although gas is a somewhat segmented market, Russia is not a major exporter of sticky prices. Instead, it is a huge exporter of goods whose prices fluctuate in real-time and move to compensate for changes in the dollar.

So this experiment is unlikely to have a positive effect on the ruble’s exchange rate in the long run. With the normalization of the environment and the abolition of the imposed measures, the ruble is expected to follow the long-term trend of the Russian economy, which will weaken more and more unless there is some drastic change in the policy pursued.

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