The Magazine for Asian Investors
Trade relations for energy products between Russia and Germany go back for many decades. Even in times of great disagreements, such as the Cold War, gas supplies from Russia were not interrupted.
Now, since yesterday, Russian troops have crossed the border into Ukraine and are starting their military operations in the two independent territories of Donetsk and Luhansk, which have been declared independent by Russia. According to mainstream media, there have been missile attacks and attacks on Ukrainian military facilities. Europe now fears that Russia could use energy supplies as a strategic means of exerting pressure against Europe and especially against Germany.
Germany imports around 55%, or over 56 billion cubic meters, of the natural gas it needs from Russia. In addition, there is crude oil with almost 35%, which is also no small number, and thermal coal with over 50%. This makes Russia one of Germany’s main energy suppliers. But the German problem is also distributed on the domestic market because meanwhile every second home is heated with gas. In addition, the large industry in the country, which is also the largest consumer of natural gas (requires about 35%) is increasingly restless, which is mainly due to the skyrocketing natural gas prices. Furthermore, Germany has one of the largest gas reservoirs in the world, but this is of no use if the reservoirs are only just over 40% full. In addition, about 10% of these gas storage facilities are also operated by Russia.
Those who now believe that Germany can simply switch to imports of liquefied natural gas (LNG) from the U.S. are still mistaken at the moment. The ports in Germany do not have their own receiving points for LNG, and these ship deliveries are also more expensive than pipeline gas imports. Fracking, which is used in the U.S. to produce natural gas, is not particularly well regarded in Germany. Thus, LNG imports from the U.S. are not yet a substitute for Russian gas.
According to German Economics Minister Habeck, initial outages can be bridged well for a long time The national oil reserves can cover a good 90 days, gas supplies could come from other sources, but the situation with thermal coal is unclear. To that end, he said he must now “take care of a coal reserve.”
However, Habeck said that rising prices must be expected.
“I suppose we’ll see gas prices rise now in the short term, but in the medium term I hope the market will settle down quickly,” however, he said later, “[Gas prices to] settle at higher but tolerable levels.”German Federal Minister of Economics Robert Habeck
Germany has now stopped certification of the controversial Nord Stream 2 gas pipeline for the time being. The reason is the conflict in Ukraine. This was announced by Chancellor Scholz on Tuesday (February 22, 2022).
” […] I called on the Federal Ministry of Economics and Technology to withdraw the present report on the analysis of the security of supply at the Federal Network Agency. It sounds technical, but it is the necessary administrative-legal step so that now no certification of the pipeline can take place and without this certification Nord Stream 2 cannot go into operation.”German Chancellor Olaf Scholz
Since Germany is now well aware of its position in the dispute with Russia, the aggressive voices on the part of German politicians against Russia have also become quieter.
On the Russian side, gas prices for Europe are already predicted to reach 2000 euros.
“German Chancellor Olaf Scholz instructed to stop the certification of the Nord Stream 2 gas pipeline. Well, welcome to the new world, in which Europeans will soon pay €2,000 per thousand cubic meters of gas.”Chairman of the Russian Security Council Dmitry Medvedev