Germany to pay a record €33.9 billion for Russian oil and gas in 2022

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Frontier India News Network
Frontier India News Network
Frontier India News Network is the in-house news collection and distribution agency.

This year, Germany will pay a record amount to purchase energy resources from Russia, states Deutsche Wirschafts Nachrichten on Tuesday, April 19.

The media house said the spending of the German authorities on Russian oil might increase from €11.4 billion to €14.3 billion. Germany can spend twice as much on gas imports, up to €17.6 billion. Also, the Germans will have to spend about €2 billion more on Russian coal. In total, Berlin will pay Moscow €32 billion.

The German publication t-online reported that the environmental organization Greenpeace called on Germany to reconsider its energy policy amid high spending on energy resources.

On April 21, the German publication Bild advised readers to bathe like a cat to counter energy dependence on the Russian Federation. On April 18, German trade unions called on the authorities to oppose the EU’s immediate withdrawal of Russian gas imports, stating that such a move would lead to plant closures and job losses.

On April 9, Bavarian Prime Minister Markus Soeder, in an interview with the Thüringische Landeszeitung newspaper, said that a sharp embargo on Russian gas would result in unemployment, social decline and a crisis of democracy in Germany.

On April 4, the head of Deutsche Bank, Christian Sewing, noted that in the event of an embargo on the supply of oil and gas from Russia, the economy of Germany and Europe as a whole could fall into a growing recession and eventually collapse. He added that the German export-oriented economy is relatively dependent on Russian energy sources. After the start of the Russian special operation in Ukraine, the German government is making every effort to change course, he said.

Western countries began to impose anti-Russian sanctions in connection with Russia’s conduct of a special operation to protect the Donbas, after which problems started in Western countries related to rising energy prices.

Germany carries vast risks for German business and small and medium-sized enterprises 

The embargo on Russian energy supplies to Germany carries enormous risks for German business, and small and medium-sized enterprises will suffer especially from such a decision, writes the Handelsblatt newspaper.

According to a survey conducted by the association of small and medium-sized businesses, ZGV, a significant part of these companies did not enter into long-term contracts for energy supply. Thus, only two per cent of the 42,000 surveyed companies announced agreements for more than three years.

According to Handelsblatt, the survey results show that the embargo on the supply of Russian energy carriers carries huge risks for German businesses, and small and medium-sized enterprises are primarily dependent on supplies. According to the ZGV survey, 47% of these companies use gas as their main energy source, and 16% use oil.

At the moment, many companies are already experiencing difficulties due to high energy prices. At the same time, small and medium-sized enterprises face a wave of bankruptcies, which is why the German government announced an economic assistance program, the article says.

However, experts believe that it is impossible to eliminate the threat in this way. “The government’s announced energy cost support program will not prevent many bankruptcies of small and medium-sized enterprises if energy prices remain unstable,” Christoph Niering, chairman of the German Association of Arbitrators, was quoted as saying by the newspaper.

According to preliminary data from the German Federal Statistical Agency, the number of bankruptcy proceedings in March increased by 27%, the newspaper notes. At the same time, experts from the Leibniz Institute for Economic Research in Halle assume that their number will only grow in the coming months.

German citizens get poorer

According to Focus Online, German citizens are increasingly facing financial difficulties due to rising energy prices. 

According to the latest data, almost one in seven Germans have difficulty meeting their daily expenses.

However, as Focus warns, the situation could worsen: high energy prices led to inflation in March, being 7.3%, the highest rate in the last 40 years. Compared to last year, energy costs for enterprises have increased by 70%, and the number of required resources by about 20%.

The publication concludes that all these increased costs will be reflected in consumers, with prices rising not only for gas, gasoline and electricity but also for food, furniture, and more.

Earlier, Economy Minister Robert Habeck said that Germany was facing “new poverty” due to rising energy prices.

Berlin expects to stop importing coal and oil by the end of 2022 and gas by mid-2024. Germany received almost 55 per cent of its natural gas imports from Russia at the beginning of the year, but this share has now been reduced to 40 per cent. An alternative to Russian gas, from the point of view of official Berlin, could be LNG from Qatar, the USA, and other countries.


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