Page 6 - FSUOGM Week 09 2022

FSUOGM COMMENTARY FSUOGM

Russian invasion triggers U-turn in

German energy policy

Germany has generally been comfortably with its significant reliance on

Russian energy over the years. But those days are seemingly over

GERMANY GERMANY has generally been quite com-
fortable with its significant reliance on Russian
WHAT: energy, despite the political strings attached to
Germany is no longer this. The country relies on Russia for half of its
comfortable with its gas and coal, and just over a third of its oil. And
significant reliance on it has been an ardent supporter of Russia’s Nord
Russian energy. Stream 2 pipeline, even though it would only
increase this dependency.
WHY: That long-standing support ended abruptly
Berlin had responded last week, when German Chancellor Olaf
firmly to Russia's Scholz said his government would halt the cer-
invasion of Ukraine. tification process necessary for the completed
Nord Stream 2 to flow gas. That decision was
WHAT NEXT: taken after Russian President Vladimir Putin
Nord Stream 2 now recognised Ukraine’s eastern breakaway states
looks very unlikely to be of Donetsk and Lugansk. A day later, Mos-
realised, and Germany cow launched its all-out invasion of the rest of
plans to build new LNG Ukraine.
terminals in its stead. While it is not completely beyond the realms
of possibility that Nord Stream 2 might still
be revived in the event of a faster resolution finalising arrangements. Government support
in Ukraine, it seems extremely unlikely. Ger- – whether regulatory or financial – could take
man policy towards Russia has undergone a the project over the finish line.
sea change. Over the weekend, its government The same could be true of a rival plan for a
announced it would provide Ukraine with anti- 10 bcm per year LNG terminal in Wilhelms-
tank and anti-aircraft equipment, marking the haven, spearheaded by Uniper. Uniper had been
first time it has sent lethal weaponry to a con- thinking about converting the facility to receive
flict zone since World War 2. It has also backed hydrogen instead, however, after failing to attract
Western plans to block Russian banks from the enough binding booking for its capacity. But
SWIFT financial messaging system, after some assuming Nord Stream 2 falters, the European
initial reluctance. companies supporting the project – Shell, Win-
Scholz has also confirmed a substantial shift tershall Dea, OMV, Engie and Uniper itself –
in German energy policy. In Nord Stream 2’s could get behind LNG instead.
absence, the country plans to build two LNG One of those companies, Shell, already
import terminals in Brunsbuettel and Wil- announced on February 28 that it was with-
helmshaven, while also taking steps to ramp drawing from the project, while also severing ties
up domestic gas supply, which has been falling with Gazprom in the Russian upstream industry.
for years. OMV said it was holding crisis talks regarding
Dutch companies Gasunie and Vopak, the pipeline on the same day.
together with Germany’s Oiltanking, are work- Germany is also putting extra emphasis on
ing towards a final investment decision (FID) on energy security and less on the energy transition
a 8bn cubic metre per year regasification termi- in light of events in Ukraine. Scholz said that
nal in Brunsbuettel. They signed a preliminary Germany would also slow down the phase-out
offtake agreement with German energy group of its nuclear and coal plants, which had been
RWE in 2018 covering a “substantial” part of due to be retired over the next decade, to provide
the terminal’s capacity, but have had difficulty necessary baseload capacity. ™

P6 www. NEWSBASE .com Week 09 02•March•2022