Chancellor Scholz says Russian energy supplies “essential” as fears of halt to trading loom

German Chancellor Olaf Scholz has rejected calls for immediately ending all energy trading with Russia in response to its invasion of Ukraine. “Europe’s supply of energy for heating, mobility, electricity and industry currently cannot be secured in any other way,” Scholz said in an e-mailed statement from the government. He added that other steps taken by Western partners to sanction the Russian government would be “hitting hard and can be sustained permanently.” The head of Germany’s government said the exempting energy trading from the current slew of sanctions was a “conscious” decision by European governments, as these imports “are of essential importance for the everyday life of our citizens.” Scholz said the German government and its EU partners have already been working “intensely” for months to find adequate substitutes for Russian energy imports. “But this won’t work from one day to the next,” the chancellor said. The German government would therefore deliberately choose to continue trading with Russian energy companies, he said.  

Representatives of the Russian government, meanwhile, stoked fears that the Kremlin could move to fully weaponise energy trading. Deputy prime minister Alexander Novak said Russia had “every right” to put an embargo on pumping gas through the Nord Stream 1 pipeline under the Baltic Sea, citing Germany’s decision to suspend licensing of the parallel Nord Stream 2 pipeline in response to Russia’s war of aggression against Ukraine to legitimise the introduction of a “matching decision.” Novak also warned against banning Russian oil imports in the context of economic sanctions against the country, arguing this would lead to “catastrophic consequences for the global market,” with prices possibly climbing to over 300 dollars per barrel. The US house speaker Nancy Pelosi said lawmakers in the US would move ahead with a ban on Russian oil imports, possibly heralding a wider ban on energy trading between the two countries, CNN reported. According to media reports, the US could move ahead with trading bans without its European partners.

Germany's academy of sciences, Leopoldina, meanwhile released a statement saying that the country could weather a disruption of Russian gas imports. "A stop of deliveries of Russian gas would be manageable for the German economy also in the short-term," the academy said. More liquefied natural gas (LNG) imports, reduced consumption and filling storages as a cushion for the next winter season would be needed to shield the economy from supply disruptions, as well as a temporary greater reliance on coal-fired power plants. This would inevitably lead to higher costs for customers that will require support measures to avoid hardships, Leopoldina said.

Energy industry association BDEW warned that gas delieveries could only be partially replaced and warned against "massive negative consequences" in case of a complete embargo on energy imports from Russia. "The gas supply is secure for this heating season even in the event of a supply stop," BDEW head Kerstin Andreae said. Supply could be guaranteed through a range of measures coordinated with other European states. "But it's clear that a supply stop would have a huge influence on procurement and thus also on prices," Andreae said.