Putin’s gas blackmail in 2022 did not work. Moscow underestimated the political determination of Berlin, the financial power of Germany, the flexibility of its business and the self-discipline of the Germans.
Can a highly developed economy that buys 55% of its natural gas, 50% of its coal and 35% of its crude oil from the same supplier get rid of such dependence in just one year?
In January 2022, life without energy carriers from Russia was not even thought of in Germany. At the end of February, immediately after the large-scale invasion of the Russian Federation into Ukraine, a quick rejection of them seemed impossible. But by December, the Germans had achieved just that.
“German economic miracle 2.0”
Historians and economists often use the term “German economic miracle”: it describes the rapid rise of the German economy from the ruins of the Second World War. It is quite possible that soon the term “German economic miracle 2.0” will appear in the scientific literature, designed to emphasize the extraordinary nature of the changes that took place in the economy and especially in the energy sector of Germany in 2022.
At the same time, the gas sphere has changed especially strongly. After all, to quickly switch to other countries during the delivery of oil and coal by sea is a task in the conditions of the world market, which is functioning normally, in general, it is quite feasible. But how to replace gas imports in a matter of months with a system of pipelines built over decades, laid from a small number of geographically close countries?
When German Economy Minister Robert Habeck announced a few weeks after the start of the Russian invasion that Germany “could become almost completely independent of Russian gas by the middle of 2024,” many thought this forecast unrealistic. Moreover, they believed in this the least in Moscow. There was a firm conviction that the economy and population of Germany simply cannot survive without Russian gas, and therefore political pressure can be exerted on Berlin, step by step reducing supplies and threatening a complete “gas cutoff.”
This turned out to be one of those fatal mistakes of its leadership for the Russian Federation, for which 2022 was so full. For the Russian state company “Gazprom”, such a fundamental miscalculation by the Kremlin will result in the loss of its main foreign sales market – Germany, which until now bought a quarter of all pipeline gas exports from the Russian Federation year after year. However, in mid-June, the Kremlin did not know about this yet and hoped for the effectiveness of their blackmail.
From August 31, 2022, Germany will live without supplies from Gazprom
Gazprom then immediately cut Nord Stream supplies to Germany by 60 percent, citing problems with Siemens Energy’s turbines. In time, this step coincided with the visit of the Chancellor of Germany, Olaf Scholz, to Kyiv, where he supported granting Ukraine the status of a candidate for EU accession.
In July, the gas pipeline was completely shut down for a ten-day planned repair, then the pumping volumes decreased already by 80% of its carrying capacity. At the end of August, new unscheduled three-day preventive works were announced, after which the supply to the German market was no longer restored.
The diversion on “Nordic Streams”, which almost completely destroyed these gas pipelines, happened only four weeks ago, on September 26. But even after that, Gazprom could supply Germany with gas if the Kremlin wanted to increase supplies via transit through Ukraine or lift Russian sanctions on the Yamal-Europe gas pipeline that leads to Germany.
Thus, since June, the Germans have not received from Russia the usual, fixed in long-term contracts volumes, on which they firmly counted, and since August 31, they have completely got rid of Russian pipeline gas – the same 55% of their needs.
Despite this, Germany was able to fill 100% of its gas storages ahead of time in autumn, did not freeze during the first December cold weather, and celebrated Christmas as usual. At the end of the month, against the background of warm weather, the country even resumed pumping gas into underground storages (the level of their filling again reached about 89%) and enters 2023 in a situation where most experts are revising their previous pessimistic forecasts.
Now scientists predict only a mild recession for the German economy in the coming months and even suggest that the crisis can be avoided. Especially if oil and gas prices continue to decline or at least remain at the current relatively low levels corresponding to the pre-war level of the beginning of 2022.
The German government was against the gas embargo
How did all this become possible? What are the real reasons for such a “miracle”? What did Putin not take into account or underestimate in the rush to blackmail Germany with gas? Why did Germany overcome its gas dependence on Russia much earlier than predicted by Economy Minister Habek and many experts?
Many, but not all. Back in the spring, when the issue of introducing an EU embargo not only on Russian coal (entered into force on August 10), on sea deliveries of oil from Russia (effective on December 5), but also on pipeline gas from the Russian Federation was discussed, a number of experts, for example, Professor Rud
Rüdiger Bachmann, provided calculations and suggestions on how Germany could immediately abandon Gazprom’s products as well. But then the government of Germany, forced to take into account the fears of the population and business, did not risk taking such a step.
However, he quickly began to prepare the country for the increasingly likely day when Russia will stop supplying gas. Thus, already on February 27, three days after the Russian attack on Ukraine, Chancellor Olaf Scholz, in his famous speech about the “change of eras”, announced the construction of two liquefied natural gas terminals in Germany.
Until now, Germany was the only large EU country that did not have an infrastructure for receiving liquefied natural gas on its territory, as it relied entirely on pipeline supplies from Russia. Six months later, by the end of summer, the number of planned LNG terminals financed from the state budget increased to five.
Billions from the state budget for LNG terminals and gas filling
At the same time, in order to speed up the process as much as possible, Berlin immediately bet on the long-term lease of regasification vessels, in other words – ready-made floating factories. When the first of them was officially put into operation in Wilhelmshaven on December 17, the German media talked about a “miracle”.
It did not consist in the fact that in eight months a new pier was built in the port and a pipe 26 kilometers long was laid to the main gas pipeline. And the fact that obtaining various permits for such infrastructure projects usually takes years in Germany. But this time, the unprecedented speed was provided by a special law adopted in the spring with the aim of speeding up the construction of LNG terminals as much as possible.
So this winter, Germany will receive gas from three such terminals (two with state participation and one completely private), and in the next heating season there will be at least six of them with a total capacity of more than 30 billion cubic meters per year. Together with the increased (up to the technically possible limit) pipeline supplies from Norway, which Berlin urgently agreed with Oslo in the spring, these volumes will replace at least two-thirds of the former Russian supplies via the Nord Stream. Its capacity was 55 billion cubic meters per year.
In addition, Germany will still be able to import gas through LNG terminals in the Netherlands, Belgium and France, which it has been doing intensively since the summer of 2022.
Actually, the “miracle” of the record, 100% filling of German storage facilities is explained mainly by the fact that the German government provided the companies Gazprom Germania (now SEFE) and Uniper, which were taken under its control, with many billions of euros – and they, in fact, bought up all the free volumes on the market , despite the prices.
This undoubtedly cost the German treasury very dearly, in particular due to the incredible rise in prices in August, but without these costs Germany would have suffered incomparably more serious losses in the event of a severe economic crisis.
Temporary extension of the life of nuclear power plants and coal-fired power plants
However, the increase in supplies of Norwegian pipeline gas and LNG imports through terminals in Germany and neighboring countries still does not fully compensate for the volumes that were previously purchased from Gazprom. Therefore, Germany will definitely have to reduce gas consumption. The task of saving fuel was especially acute in 2022.
The main contribution of the government and parliament to its solution was that they temporarily departed from the course promised to the voters to reduce coal-fired electricity generation and changed the current laws so as to temporarily reconnect to the grid already placed in reserve and even mothballed power plants that use imported stone and local lignite. In addition, the long-planned final abandonment of nuclear power on December 31, 2022 was postponed for several months.
All this was done in order to use as little gas as possible for the production of electricity this winter. From the “Greens” party, which supported these measures and plays an important role in the current government coalition in Berlin, few expected such pragmatism and readiness for compromises in matters of coal and nuclear power plants.
Both industry and households provided gas savings
German industry made a big contribution to saving gas, which suddenly became scarce and extremely expensive. It uses it mainly not as a raw material, but as a fuel for factory power plants and in the production of heat for technological processes. Enterprises that had this opportunity partially or completely switched to other energy sources – oil products and coal. In a number of branches, especially in the chemical industry, savings were provided by the reduction of production.
And the contribution of ordinary Germans to the solution of the nationwide task of saving gas is very eloquently testified by the fact that the Vice-Chancellor, Minister of Economy and Climate Protection of the Federal Republic of Germany, Robert Habeck (Greens Party), who started a campaign for energy saving in everyday life in June, in a TV interview before the Christmas holidays, he thanked his compatriots for the conscious approach shown this year.
As during the pandemic with its mask regime and loсkdowns, German society against the background of a new danger – a physical shortage of gas and high prices for it – again demonstrated self-discipline and deliberately reduced fuel consumption during home heating. Moreover, it did this not only in order to save money and “give an answer to Putin”, but now also for the sake of reducing greenhouse gas emissions into the atmosphere, which are harmful to the climate. This motive, which is important for man y Germans, is definitely underestimated in Moscow.
According to Eurostat, the European statistical office, the total gas savings in Germany was approximately 25% from August to November. Together with all the other measures listed here, this was enough to put an end to gas dependence on Russia in 2022 and start a new life without Gazprom without great losses and mismanagement.