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  • On April 8th 2022, the European Union

  • issued a fifth round of sanctions against Russia.

  • "And, ladies and gentlemen, I think that measures

  • on oil, and even gas,

  • will also be needed sooner or later."

  • Did you get that?

  • Even gas will also be needed sooner or later

  • In other words, not now.

  • Since the war in Ukraine began,

  • the EU has imposed sanctions that restrict the flow

  • of Russian money, and goods...

  • they've targeted banks, companies, individuals...

  • But natural gas remains untouched.

  • The EU gets nearly a quarter of its energy from gas.

  • And nearly half of it comes from Russia: the world's largest gas exporter.

  • Russia delivers the vast majority of its gas to Europe through this network of pipelines.

  • And as the EU's largest economy, nobody buys more of it than Germany.

  • Since the invasion of Ukraine began,

  • Germany has paid Russia about 220 million euros a day for gas.

  • Germany uses gas to heat more than 20 million homes.

  • And to power a lot of the country's industry.

  • And Germany's government has spoken out against sanctions

  • that would limit the flow of it.

  • "It's not possible...to cut the gas supplies."

  • But with every payment Germany makes to Russia's state-owned natural gas company...

  • it's also paying for Russia's war.

  • So, how did Germany become so dependent on Russia for something

  • as vital as their energy supply?

  • And why can't they quit?

  • Germany was at the literal center of the Cold War.

  • After World War II, a fortified border separated independent West Germany

  • from East Germany and other Soviet satellite states.

  • WWII had left Germany in ruins.

  • But by the 1950s West Germany was experiencing a remarkable economic recovery.

  • German industries like steel prospered.

  • But they needed more energy to power their growing economy.

  • Meanwhile, over here in western Siberia

  • the Soviet Union had just discovered huge natural gas reserves.

  • They had a network of pipelines to supply major Soviet cities,

  • but extending their pipelines to potential customers in Europe

  • would be a huge infrastructure project.

  • Then, in 1969, West Germany elected a chancellor with

  • a new foreign policy called Ostpolitik,

  • focused on bringing the two sides closer together through dialogue and deals.

  • Energy provided a great opportunity.

  • And West Germany and the Soviet Union struck a deal.

  • The Soviet Union would supply West Germany with natural gas.

  • And in return, West Germany would provide high quality steel pipes

  • to extend the pipelines.

  • It was a major 20-year deal.

  • To get how this deal locked Germany in,

  • it's important to understand what makes piped natural gas different

  • from other energy sources.

  • Natural gas, with coal and oil, is one of the three

  • main fossil fuels used around the world.

  • But unlike coal and oil, which can be shipped or rerouted worldwide,

  • piped natural gas is a regional product that depends on proximity.

  • To transport it, gas producers spend millions of dollars

  • to build pipelines that connect producers and buyers.

  • Because these pipelines are such big and permanent commitments,

  • gas deals can link a buyer's energy infrastructure to the sellers for decades.

  • By the 80s, the Soviet Union built this pipeline network to Europe.

  • And by the 90s, it was supplying Germany with 40% of its gas.

  • Then, the Soviet Union collapsed.

  • Russia's state-owned corporation, Gazprom, took over the old Soviet gas pipelines.

  • But, the map had been redrawn.

  • Russia's main pipelines now ran through a newly independent Ukraine,

  • putting a key part of their gas infrastructure on land they no longer controlled.

  • So, in order to diversify the routes to Germany, Russia began building new ones.

  • In 1999, they finished this pipeline that ran through Belarus.

  • And in 2005 they began building the Nord Stream pipeline

  • along the Baltic Sea to reach Germany directly.

  • They also built pipelines inside Germany.

  • And opened a subsidiary there to operate gas storage facilities.

  • Including this one here, one of the largest in Western Europe.

  • Russia now had three routes reaching Germany,

  • as well as pipelines and storage facilities inside Germany.

  • The gas trade was strong.

  • But it had also changed Russia's relationship with Europe.

  • At the end of 2008, gas price negotiations between Russia and Ukraine fell apart.

  • A few days later, Russia cut off gas to Ukraine for 20 days.

  • The thing is, because Ukraine was a major transit country,

  • when Russia cut off their gas, they cut off a lot of European gas too.

  • As a result, all these countries saw a drop in their supply,

  • and tens of thousands lost heat.

  • In Poland, at least eleven people froze to death.

  • All this put Europe on alert.

  • It was now clear that through gas flows, Russia held immense power over Europe.

  • But, up here, another link to Russia was in the works: Nord Stream 2.

  • A new 11 billion dollar pipeline to run alongside the first Nord Stream

  • and double the capacity to Germany.

  • Then, in 2014, Russia annexed Crimea and invaded Eastern Ukraine.

  • In response, the EU issued a series of sanctions.

  • Some countries began to wean themselves off Russia's gas.

  • But Russian gas kept flowing to Germany.

  • In fact, Germany imported more gas than ever before.

  • Today, as Russia's atrocities in Ukraine continue to shock the world,

  • pressure on Germany is mounting.

  • But replacing Russia's gas isn't easy.

  • Because it's been piped to homes and businesses for decades,

  • without a major infrastructure overhaul, Russian natural gas

  • can only be replaced with other natural gas.

  • And Germany's options for that are limited.

  • The largest European natural gas reserve, here in the Netherlands, is closing this year.

  • Gas from Algeria and Libya is increasingly used in those countries.

  • Most of what is pumped to Europe goes to Italy and Spain.

  • And a southern gas corridor connecting Azerbaijan to Europe

  • is not transporting as much as expected.

  • The other option is Liquified Natural Gas or LNG.

  • That's gas that's been cooled until it becomes liquid

  • and can be transported in these massive ships

  • from anywhere in the world.

  • But It's a time-consuming and expensive alternative

  • that requires a lot of new infrastructure.

  • In the last two decades, European countries have built

  • LNG terminals along their coasts.

  • Germany plans to open 3 in the next 5 years.

  • But as of today, doesn't have any.

  • Replacing natural gas and all fossil fuels with renewables is Germany's ultimate goal,

  • but that requires a massive and expensive transition

  • that won't be complete until 2035.

  • Meanwhile, at home, Germans are demanding action.

  • According to this poll, the majority of Germans support a boycott of Russian gas.

  • But economists predict that cutting gas imports could cause an economic recession

  • that could cost hundreds of thousands of jobs.

  • But they have taken some steps.

  • The Nord Stream 2 pipeline was canceled.

  • They have also reduced dependence on Russia's gas by 15%.

  • And have taken over the Gazprom subsidiary that runs gas operations in Germany.

  • But the government and business leaders

  • continue to push back against sanctioning gas entirely.

  • Germany is stuck.

  • And the stakes are now higher than ever.

On April 8th 2022, the European Union

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Why Germany is hooked on Russian gas

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    林宜悉 posted on 2022/05/04
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