Germany boycotting Russian Oil and Gas is a necessary step toward an EU-wide boycott of Russian oil, gas, coal, and electricity. German minister Annalena Baerbock announced “Germany is also phasing out ALL imports of Russian energy” as part of expanded Russian sanctions.
Germany Boycotting Russian Oil and Gas is a Big Step for Germany
which in February 2022 obtained 33% of its oil from Russia. In March, Germany had reduced this figure to 25% of its oil imports, and at the end of April this was reduced to 12%, and all of that crude oil was being shipped to one refinery in Schwedt, Germany owned by Rosneft, a Russian oil company.
Germany has committed to eliminating all oil imports from Russia by the end of 2022, and with only 12% of its crude oil coming from Russia to supply a single refinery in Schwedt, Germany, a sudden cutoff by Russia is not going to have the crippling effect on Germany that it would have had in February.
Germany’s Economy Minister, Robert Halbeck, announced that Germany is looking for a replacement crude oil supply for the Schwedt refinery, which will complete Germany’s independence from Russian crude oil imports.
Other European countries have been a little less aggressive at eliminating imports of Russian oil, but with Germany’s new commitment to the oil boycott, the EU boycott should gain momentum.
Germany Boycotting Russian Oil is Easier than Eliminating Russian Natural Gas
According to the Institure for Energy Research, https://institureforenergyresearch.org Germany obtained 40% of its natural gas imports from Russia, and by the end of April this was reduced to 35%.
Eliminating the remaining 35% of Germany’s natural gas supply supplied by Russia will not be easy or fast.
- In warmer months, natural gas gets purchased to be stored for use in cold months, as well as for heating and cooking, electrical generation and industrial uses. Currently, Germany’s natural gas storage facilities are only 25% full, and that may need to take lower priority while Germany is eliminating Russian imports.
- Electric power generation uses 13% of its natural gas supplies, and can be shifted to coal temporarily while Germany finds alternative supplies for natural gas.
- Industrial uses, including use in oil refineries and chemical processing, account for 33% of Germany’s natural gas consumption. Curtailing these uses would cripple their economy, so an alternative imported supply will be needed.
- That leaves about 54% of Germany’s natural gas consumption used primarily for household heating and cooking, and that will need to be supplied by an alternative imported supply because these people cannot suddenly switch to an alternative.
- Switching to electricity to replace natural gas is not a solution because the electricity need to be generated by new generators that need an additional imported fuel source and an improved power grid, all of which needs time and money.
- Alternative energy sources like solar energy and wind energy will help but do not supply the baseline energy supply that oil and natural gas and coal provide. Nuclear power and an improved power grid can be part of a long term solution but nuclear power does not have enough popular and political support in Germany at this time.
New Infrastructure and New Imported Energy Sources are Needed Quickly
Suspending storage operations and switching electric generation to coal is not enough to eliminate Russian natural gas imports. Therefore, additional imports will need to come through new pipelines and liquified natural gas (LNG), through new LNG terminals Germany is building.
Germany will import natural gas from Quatar and the United Arab Emirates, and the United States has committed to expanding LNG exports to Europe, which will likely require additional LNG terminals at both exporting and importing countries, and construction of additional ships equipped to carry LNG between countries.
All of this will require time and lots of money, but the economic calamity that would result if Russian gas was suddenly cut off to Europe would be worse, and Vladimir Putin knows that he currently holds this trump card.
Both Sides are Hedging Their Bets While Bluffing
Both sides are playing a high-stakes poker game, in which Europe can cut its dependence on Russian oil and gas as quickly as possible, while it hopes that they can reduce enough of their dependence on Russia fast enough that if Russia cuts off Europe’s gas, it will not cripple Europe.
At the same time, Russia knows that even if it diverts their gas exports to China and India, that will time and money to complete construction of a new gas pipeline, new gas and oil pipelines, and LNG facilities.
In the meantime, a massive gas cutoff initiated by Russia would hurt both Russia and Europe, so both sides are bluffing while they are making these alternative arrangements.
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