Long-term contracts with Moscow were not vulnerable to external shocks or market fluctuations, Berliner Zeitung has said
Germany is now paying five times as much for imported gas than it did before abandoning its long-term Russian supply contracts as part of the EU sanctions, Berliner Zeitung has reported.
Berlin now has to rely on the volatile international energy market, which is reeling from the de-facto closure of the Strait of Hormuz during the ongoing conflict between the US and Iran, the newspaper wrote on Wednesday.
Once Europe’s industrial powerhouse, Germany abandoned cheap Russian gas imports in 2022 as part of the EU’s sanctions campaign against Moscow following the escalation of the Ukraine conflict. Combined with the phaseout of nuclear power in favor of renewables, this self-imposed embargo has dealt a major blow to Germany’s industrial sector.
Read more German energy crisis caused by ‘lack of Russian gas’ – MerzBefore the embargo, Russia supplied 55% of the country’s natural gas imports. Germany now sources its gas from Norway (44%), the Netherlands (24%) and Belgium (21%), with American liquefied natural gas (LNG) accounting for most of the remainder.
According to Berliner Zeitung, Germany’s gas import price has risen from €12 ($13.65) per megawatt-hour in 2020, when long-term contracts with Russia were still in force, to more than €60 ($68.25) this week amid the continued exchange of strikes between Washington and Tehran.
“The old Russian contracts were cheaper than the market price,” the media outlet said, adding that Germany would also be unable to increase gas imports if needed since “the pipelines from Norway are at their [full] capacity” and “cannot handle much more.”
Read more Germany to hit its industry with more energy tariffsThe decision to abandon cheap Russian energy played a major role in slowing down the German economy. It contracted in both 2023 and 2024, its first back-to-back annual decline in more than two decades, and is forecast to grow by just 0.5% this year. Corporate insolvencies also rose by more than 22% in each of those years, according to official data.
On Monday, Chancellor Friedrich Merz openly admitted that the ongoing energy crisis was caused by “the lack of Russian gas.”
Moscow has repeatedly said it is ready to resume gas deliveries through the Nord Stream pipeline string that survived the 2022 sabotage attack but has received no response from Berlin. Instead, Germany plans to impose new tariffs on its already struggling industrial sector to fund the construction of a national gas reserve.
The EU also pledged to end all Russian gas imports by 2027, with European Commission President Ursula von der Leyen stating in March that Brussels would stick to this course even in the event of physical gas shortages or the threat of power cuts.
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