Germany depends on Russian gas, oil and coal: here’s why

Last year, Russia supplied more than half of the natural gas and about a third of all the oil that Germany burned to heat homes, fuel factories and fuel cars, buses and trucks. About half of Germany’s coal imports, essential for its steelmaking, came from Russia.

Russian gas, oil and coal are an integral part of the German economy and way of life. The roots are deep.

The first gas pipeline linking what was then West Germany to Siberia was completed in the early 1980s. The legacy of the Cold War is still visible in the energy infrastructure of eastern Germany , which remains directly linked to Russia, which makes it more difficult to bring oil from other suppliers to this part of the country.

Today, those entanglements loom large as European leaders debate whether energy should be included in more sanctions on Russia amid mounting evidence of atrocities committed by Russian troops against Ukrainian civilians. Officials in Germany, Europe’s largest economy, are caught between outrage over Russia’s aggression and their continued need for the country’s essential commodities.

“It was a mistake that Germany had become so heavily dependent on energy imports from Russia,” Christian Lindner, Germany’s finance minister, said in talks with his European Union colleagues in Luxembourg on Tuesday.

He said Germany would support a fifth sanctions package against Russia, including a ban on imports of Russian coal, announced by European Union President Ursula von der Leyen on Tuesday. This would be a change from Berlin’s recent insistence that energy sanctions would hurt Germany more than Russia.

From executives of major chemical and steel companies to makers of gummy bears, business leaders have warned that without a steady supply of gas, oil and coal, their production will come to a halt.

Almost half of all German homes are heated with natural gas, which is also used to generate electricity in heavy industry. Germany’s powerful chemical, mining and pharmaceutical unions have warned that serious cuts in gas imports could lead to substantial job losses.

A group of economists from the Leopoldina National Academy of Sciences said in a report last month that a short-term halt to Russian gas supplies would be “manageable” if the country could increase its dependence on other sources of gas. ‘energy.

Robert Habeck, Germany’s energy minister, is trying to do just that, making trips to Qatar and Washington to secure energy partnerships. Germany has already reduced its dependence on Russian gas by 15%, bringing it down to 40% in the first three months of the year, the energy ministry said.

But industry leaders have pushed back on imposing sanctions on Russian natural gas. Turning off the taps would cause “irreversible damage”, warned Martin Brudermüller, the chief executive of BASF, the chemicals producer based in southwestern Germany. Transitioning from Russian natural gas to other suppliers or switching to alternative energy sources would take four to five years, not weeks, he said.

“Do we want to blindly destroy our entire national economy? What have we built over the decades? Mr. Brudermüller said in an interview with the Frankfurter Allgemeine Zeitung last week. “I think such an experiment would be irresponsible.”

The country’s chocolate, snack and candy makers have also warned gas shortages will spell the end of their ability to produce energy-dense foods.

“Gas is the most important energy source in most companies in the German confectionery industry,” the Association of the German Confectionery Industry, or BDSI, said in a statement. “Companies in the German confectionery industry produce food and are therefore of crucial importance for supplying the population in Germany, especially in the event of food shortages or other emergencies.

Over the weekend, Lithuania announced that it had halted all gas imports from Russia from April. But natural gas represents only 11% of the energy consumed by the Baltic country of 2.8 million inhabitants, while Germany depends on gas for 27% of its energy needs.

This year alone, the German government has pledged 500 million euros to help build a terminal needed to directly import liquefied natural gas, as part of efforts to replace the 56 billion cubic meters that Germany imports. each year from Russia. LNG is an alternative source of natural gas, a means of transporting it across the seas over long distances.

In addition to supplying a large amount of gas, Russia owns and operates thousands of kilometers of pipelines and several key storage reservoirs in Germany through subsidiaries of its state-owned energy conglomerate, Gazprom. Among them is Astora, which has the largest underground natural gas storage reservoir in Western Europe.

Mr. Habeck announced on Monday that he was placing Gazprom Germania, parent company of Astora and main subsidiary of Gazprom in Germany, under state control until at least September. The move was seen as a crucial step in regaining power over gas supply from Russian hands.

More than a third of all oil refined in Germany comes from Russia, much of it flowing directly to facilities in the former eastern states of the country through Cold War-era pipelines.

So replacing Russian oil means not only finding substitutes for a massive amount of crude – Germany bought 27 billion tonnes from Russia in 2021 – but also figuring out how to transport it to those refineries in the east of the country. No pipeline crosses the former border that divided East and West Germany.

Germany has started to diversify its oil supply, reducing Russia’s share to 25% from 35% in the first three months of this year.

From mid-April, the Leuna refinery in eastern Germany will process only half the amount of Russian oil it has handled in previous years. Instead, crude imported from other countries is transported by truck and train from western Germany, the economy ministry said.

But the PCK refinery in another eastern German city, Schwedt, is majority-owned by Russian energy company Rosneft, which has been less willing than the Leuna refinery to let Germany walk away from contracts for future oil deliveries from Russia. German media reported that the Energy Ministry was examining whether a state takeover could be justified in the name of energy security.

Coal is the easiest of the three energy sources to replace. Yet Germany has relied on Russia to supply around half of its hard coal imports, after its last coal mine closed in late 2018.

Over the past six weeks, Germany has been able to change delivery chains and sign new deals, to halve its dependency, the economy ministry said. Today, 25% of the country’s coal needs are met by Russia. It plans to completely stop fuel imports by the end of the summer.

Until then, however, Mr Habeck, the economy minister, has insisted that Germany needs a steady supply of energy to maintain its role as the region’s economic engine. This may be particularly urgent now that Europe is called upon to help provide energy and supplies to Ukraine, which last month connected its electricity grid to Europe to provide stability despite war.

Germany, after some reluctance, also supplied Ukraine with weapons, which Mr Habeck said required steel produced in German coal-fired factories, which still includes imports from Russia . How this coal would be compensated in the event of sanctions was not immediately clear.

“We are being asked to supply Ukraine with raw materials,” Habeck told ZDF public television last week. “We need an intact infrastructure to be able to do that.”

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