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ENERGY

RWE gas deal with Kurdish government rejected by Baghdad

Iraq on Sunday slammed as "illegal" an agreement between its autonomous Kurdistan region and the German energy firm RWE that is expected to help supply the planned Nabucco gas pipeline to Europe.

RWE gas deal with Kurdish government rejected by Baghdad
Photo: DPA

“All (sales) contracts and agreements signed outside the legal framework, in other words with SOMO, are illegal,” Baghdad’s oil ministry said in a statement. SOMO – the State Oil Marketing Organisation – deals with sales of Iraqi oil and gas products.

Talks on the allocation of Iraq’s natural resources are deadlocked, and Baghdad refuses to recognise contracts that the Kurdish regional government, based in the northern city of Arbil, has signed with foreign oil companies.

“No one outside the ministry has the right to sign contracts for the exportation of oil and gas,” the oil ministry added.

RWE announced on Friday it has signed a cooperation deal with the Kurds “to develop and design its domestic and export gas transportation infrastructure – creating a route to market for Kurdistan’s major gas reserves.”

“The cooperation also foresees the negotiation of gas supply agreements to enable gas from the region to be transported to Turkey and Europe via the Nabucco pipeline,” the German company said.

RWE is a key shareholder in the Nabucco project, which aims to bring up to 31 billion cubic metres (1,100 billion cubic feet) of gas annually to Europe through Turkey.

The European Union regards the project as vital to its future energy security following a number of eastern European disputes, which have disrupted supplies of Russian gas.

Kurdistan has been touted as a potential major supplier, but experts warn that instability in Iraq could make it difficult for supplies from the region to reach Europe. The regional government halted oil exports in October last year due to a payment dispute with Baghdad.

The oil ministry on May 6 said it had reached a deal with Arbil whereby all revenues would be handed over to SOMO, with Baghdad responsible for paying the extraction expenses in Kurdistan. But the agreement has not been implemented.

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ENERGY

German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.

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