Qatar not Habeck’s last trip
Germany’s alternatives to Russian gas
By Christina Lohner
03/24/2022 at 6:14 p.m
Germany wants to become independent of oil and coal from Russia this year. In the case of gas, demand can only be met from other sources in the medium term. Habeck has the choice between human rights violations and fracking – and has to commit to long-term contracts.
The pictures are irritating: Ironically, the Green Economics Minister Robert Habeck travels as a petitioner to the Emir of Qatar, where, among other things, migrant workers are exploited – party friend Annalena Baerbock called for a boycott of the World Cup there last summer. But Habeck has little leeway to become independent of Russian energy supplies. “There is another difference between a non-democratic state, where the human rights situation is problematic, and an authoritarian state, which is waging an aggressive war in front of our door that violates international law,” says the minister. “We cannot exclude all countries from deliveries.”
According to the Federal Association for Natural Gas, Oil and Geoenergy, domestic natural gas production only covers around five percent of Germany’s demand. According to the consulting firm Aurora Energy Research, around half of the imports have so far come from Russia, around 30 percent from Norway and 13 percent from the Netherlands. Gas accounts for around one fifth of the German energy mix. According to Aurora, around half of Germany’s gas consumption is for heating, German industry uses around 35 percent, and around 15 percent goes into electricity production.
Germany should no longer be so dependent on a single supplier in the future. However, the only way to cover its gas needs is liquid gas (LNG), which can be transported by ship. Germany not only imports gas from Russia via pipeline, but also from Norway and the Netherlands. But the capacities there are limited, explains Casimir Lorenz from Aurora in an interview with ntv.de. The largest LNG producers are Qatar, Australia and the USA. In Australia and the USA, gas is partly extracted using the controversial fracking method.
“Especially in the USA room for improvement”
Lorenz is convinced that Qatar was not Habeck’s last trip in terms of gas alternatives. “Germany is certainly talking to all possible suppliers,” says the energy market expert. In the USA in particular, he still sees room for LNG exports to Germany, since production there has fluctuated greatly in recent years. In Australia, capacities are limited in the short term, but can still be expanded in the medium term. However, because of the longer transport route, gas would be more expensive from there.
“There are different assessments of how much Australia, the USA and Qatar can expand their production capacities,” reports Lorenz. Large investments would also be required for an expansion. Among other things, exporters of liquefied gas would have to build plants to liquefy the gas for transport. In order to refinance this, Germany would have to guarantee long-term purchases, i.e. conclude appropriate contracts.
In the short term, however, gas imports from Russia cannot be completely replaced anyway, Lorenz clarifies. According to various estimates, the LNG terminals that Germany would first have to build for this would not be ready until 2024 to 2027. “The construction was already planned, but has not been worthwhile so far because of the low gas prices,” explains the energy market expert. Because of Russia’s attack on Ukraine, expectations of medium-term gas prices have risen sharply and there is also the political will to support these investments.
Russia is still delivering as agreed. If gas imports were stopped, Germany would not be able to fill its storage facilities for the winter in summer, says Lorenz. If demand were not reduced in this case – for example by saving on heating or less electricity production from gas – there would be a bottleneck by winter at the latest, according to the analyst. If gas became very expensive as a result, the industry would start to reduce its production because it would no longer be worthwhile.
Alternatives to oil and coal from Russia
Because it is easier to transport, oil and coal can be obtained from other sources much more quickly, and no major investments in infrastructure would be necessary, as Lorenz explains. Although both the production capacities and the number of ships for transport are limited in the short term, the export routes could be adjusted at short notice. Production is currently still below the level before the corona pandemic.
The largest oil producers are the US, Russia and Saudi Arabia, followed by Canada, Iraq, China and the United Arab Emirates. From a political point of view, the USA and Canada as well as Norway as the only large European producer would be the best alternatives to Russia. Because oil is traded globally for ease of transportation, world prices do not vary as much as gas. However, in addition to the USA, Canada also uses fracking to some extent.
According to the Federal Institute for Geosciences and Natural Resources (BGR), Germany has so far obtained a good third of the crude oil it imports from Russia. About 12 percent come from Great Britain, 11 percent from the USA, 10 percent from Norway, 9 percent from Kazakhstan, 6 percent from Nigeria, 3 percent from Canada.
According to the BGR, almost half of the imported hard coal comes from Russia, 14 percent from the USA, 12 percent from Australia, 6 percent each from Colombia and Poland, and 3 percent from Canada. The biggest coal exporters – here the exporters are crucial as the two largest producers consume a large part themselves – are Australia and Indonesia, which each ship a third of the world’s export volume. Russia, the USA, Colombia and South Africa export significantly less. Compared to Russia, the cost of transportation would be higher.
Other energy sources
In the medium term, more renewable energies and hydrogen should also help to become more independent from Russia. However, Germany will also be dependent on imports for hydrogen; on his trip to the Middle East, Habeck already agreed on closer cooperation with the United Arab Emirates.
Some would like to let the remaining nuclear power plants run longer. But Habeck and Environment Minister Steffi Lemke, also a Green Party, reject this – “as a result of weighing up the benefits and risks”.