Shortsighted Strategy

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In Germany, Russia Controls the Thermostat in Winter

  • Why it matters

    Why it matters

    Cuts in Russian supplies could wreak havoc in Germany, which depends on the country for a quarter of its oil, coal and gas.

  • Facts

    Facts

    • Concerns about having secure supplies are largely unaddressed in German energy policy.
    • The Ukraine crisis and EU sanctions is causing Russia to slow the flow of natural gas to the West.
    • Germany has no terminal for liquefied natural gas or a national supplier globally engaged in exploration and production.
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    Audio

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pipeline-Reuters-CHANGED
Maybe it’s time to move south. Source: Reuters

 

In German energy policy, precautions about supply play only a marginal role. Government energy programs, as in the 1970s after the oil price crises, are not an issue today. Back then, domestic coal and a national oil company were there to help secure supply. In addition, an internationally coordinated oil reserve kicked in.

Today, the danger of supply shortfalls is played down. If the crisis in Ukraine escalates, such a deficit could be disastrous for the natural gas supply. Russia is by far the most important supplier. A quarter of the German oil, coal and gas supply comes from Russia. Its natural gas accounts for about 35 percent of domestic gas usage.

If Russian natural gas should stop flowing to Europe, Germany’s supply situation would also be precarious. The country has no terminal for liquefied natural gas (LNG) or a national supplier that is globally engaged in the exploration and production business.

It’s coming back to haunt Germany that its coalition government of the Social Democratic Party and Green Party of 2002-03 made no hard conditions for the acquisition of Ruhrgas by E.ON. There was no discussed obligation to build a LNG terminal in Wilhelmshaven, a coastal town in Lower Saxony, nor was it reliably defined that the new E.On Ruhrgas would have to engage in the global exploration and production business on an essential scale. Only through these two conditions would government approval have been justified economically.

What next? Germany could create a strategic natural gas reserve as with oil. But gas consumers would also pay for it. Furthermore, the European gas infrastructure should be designed more efficiently through new pipelines to diversify the supply sources and to improve exchange within the European Union. More engagement in the international natural gas promotion-related business would also make sense. That, of all things, the electricity company RWE and its oil and gas subsidiary Dea are splitting up now unnecessarily weakens the German position in the exploration and production sector.

This article was translated by Anna Park Kim. Vinny Kuntz also contributed to the story. Contact the author: gastautor@handelsblatt.com

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