An immediate ban on imports of Russian oil and gas into Germany is not feasible, Germany's Finance Minister Christian Lindner said on Wednesday, although he added he was all in favor of an energy embargo.
"If I could follow my heart," there would be a ban on Russian oil and gas in Germany, Lindner said in an interview published by German weekly Die Zeit on Wednesday.
An immediate ban on imports of Russian oil and gas, however, is not feasible at present, because it would endanger Germany's economy and social stability, the minister added.
"We can't be responsible for that," he said.
Since the start of the Russian war in Ukraine at the end of February, Germany—Europe's biggest economy, which depends on Russian gas for around half of its consumption—has been one of the biggest opponents of an energy embargo on Russia.
So far, Europe—which collectively depends on Russian natural gas and oil for around one-third and one-fourth of its demand, respectively—has refrained from targeting directly Russian energy exports fearing that sanctions or an embargo could lead to a deep recession in the major European economies, including the biggest one, Germany.
Earlier this week, after photos of Russian atrocities in Bucha and other Ukrainian towns emerged, the mood appeared to be shifting even in Berlin.
The EU should discuss a ban on the import of Russian natural gas, Germany's defense minister Christine Lambrecht was quoted as saying on Sunday.
"There has to be a response. Such crimes must not remain unanswered," Lambrecht said.
The EU is considering proposing a full ban on imports of Russian coal after footage continues to emerge of alleged war crimes committed by Russian troops. The European Commission is working on more severe sanctions, including on oil imports, European Commission President Ursula von der Leyen said on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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And while the EU talks big about ditching Russian gas supplies, the problem it will face is that there is no one single gas producer in the world or even a group of producers that can replace Russian gas supplies now or for the foreseeable future.
If we look at the map of alternative gas-producing nations in the world, they are the United States, Qatar, Australia, Norway, Algeria, Azerbaijan, the Eastern Mediterranean and Iran.
The combined LNG exports of the United States, Qatar and Australia could barely replace Russian gas supplies estimated at 200 billion cubic metres (bcm) annually and 15-16 million tonnes of LNG. This is partly because of their long-term contractual arrangements with customers in the Asia-Pacific region and also lack of enough LNG terminals and storage space in the EU to even receive modest volumes if LNG.
Both Norway and Algeria can’t increase their production above the current levels for the next five years if ever.
The South Gas Corridor (SGC) bringing gas from Azerbaijan to the EU via Turkey could hardly fill its capacity of 20 bcm because of limited production.
The bulk of gas production from the Eastern Mediterranean goes towards satisfying the domestic needs of both Egypt and Israel. What is left for export is 10-15 bcm but any future exports are handicapped by political disputes with Turkey and lack of undersea gas pipeline to transport the gas to the EU.
This leaves Iran with the reserves to supply the EU with sizeable volumes. However, Iran currently neither can afford the investments needed to develop its huge gas resources nor the pipelines to transport them to Europe via Turkey or the LNG plants to convert its gas to LNG for shipment. I can’t imagine Iranian gas reaching the EU in 10-15 years from now.
And while the EU’s energy crisis is forcing it to pay sky-high prices for LNG, sooner or later the economy will reach a point where it can’t afford these prices. The EU will then realize the benefits of the cheaper Russian piped gas. That is when it will be forced to accept President Putin’s demand for ruble-for-gas.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London