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Oil Fund Withdrawals Suggest Extended Price Rally

Oil Fund Withdrawals Suggest Extended Price Rally

Investors are ditching the oil…

Germany Has Dramatically Slashed Its Dependence On Russian Gas

Europe’s biggest economy, Germany, has seen the share of Russian gas in its gas mix drop to some 20% this year from 55% last year, per data from energy lobby group BDEW cited by Bloomberg on Tuesday.

Russia started gradually cutting gas supply via the Nord Stream pipeline to Germany in June until shutting down the pipeline in early September, claiming an inability to repair gas turbines for the pumping stations due to Western sanctions.   

Germany, for its part, started looking at importing LNG and began construction of regasification terminals to be able to welcome cargoes. The first such terminal, a floating LNG import terminal, officially opened last week at Wilhelmshaven on Germany’s North Sea coast. Other LNG terminals are also planned in Germany, which was rather reluctant to commit to LNG import facilities before the Russian invasion of Ukraine. After the war started, Germany, the Netherlands, Finland, and countries in southern Europe hastened to bring forward or dust off plans to build floating LNG terminals to have enough regasification capacity to replace the lost volumes of Russian pipeline gas.  

Germany also signed a deal with Qatar and ConocoPhillips last month, under which Qatar will provide liquefied natural gas to Germany for at least 15 years beginning in 2026. Per two sale and purchase agreements between ConocoPhillips and QatarEnergy, up to 2 million tons per annum (MTPA) of LNG from Qatar will be delivered to Germany by a wholly-owned subsidiary of ConocoPhillips, which will purchase the quantities and deliver them to the Brunsbüttel LNG import terminal in northern Germany.

Despite the fast construction of LNG import facilities, Germany needs to save gas if it wants to go through this winter without extraordinary measures such as rationing, the network regulator Bundesnetzagentur and other authorities have warned for months.

Germany may have to take drastic measures such as gas rationing if levels of gas in storage drop below 40% by February 1 next year, according to the regulator, which will enact such measures if necessary.

German households and businesses have been urged to turn down their heating in order to conserve more gas as winter is coming while gas flows from Russia are cut.

By Tsvetana Paraskova for Oilprice.com


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  • Steven Conn on December 20 2022 said:
    Germany and EU might have cut their gas imports from Russia, but as a consequence their natural gas and electricity prices have skyrocketed. Even with the last 12-month record gas prices, Russian deliveries were still at 50% below spot prices. Now Germany and the rest of the EU are spending hundreds of billions of euros extra on energy and their fertilizer, chemical, and metal production is suffering. And so the EU wants to abolish one of the principles of their own spot market by establishing a price cap on gas. As for Gazprom, it has recorded record profits while delivering lower gas quantities. China, India, Turkey are getting Russian oil, gas, and coal at a discounts comfortable for both the seller and the buyer, and ditching the dollar in the process. What is the EU getting?
  • Mamdouh Salameh on December 20 2022 said:
    Europe’s biggest economy, Germany, hasn't dramatically slashed its dependence on Russian gas. It was forced upon it by a reduction in Russian gas supplies resulting from its refusal to deliver a repaired gas turbine to Gazprom because of sanctions and by the sabotaging of both Nord Stream 1 and Nord Stream 2 gas pipelines most probably by an ally of Germany.

    The amount of LNG Germany has managed to contract for with Qatar amounts to minuscule 2 million tons annually (mt/y) in addition to supplies of US LNG for which it is being charged a very exorbitant price three to four times the price US LNG is sold in America.

    This doesn’t bode well for Germany and the EU countries who will continue to be bedevilled by difficulties to replace Russian gas supplies and finding new LNG supplies and also by a continuing energy crisis sapping their economies well into the future.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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