This week, Russia cut gas inflows to Europe by 40%. Officially the country blamed delayed repairs in the Nord Stream 1 pipeline which carries gas from Russia to Europe. This move sent Europe into chaos. Countries, especially Germany, were rattled by the cut and started to frantically look for alternatives.
Now, the Kremlin has announced that the Nord Stream 1 pipeline will be shut for “maintenance” from July 11 to 21. This news has sent shockwaves across Europe again with Germany accusing Russia of political vendetta, and rejecting their “repair” claim.
High Dependency on Russia
Why does Europe go into panic mode, every time Russia threatens to ban oil? The answer is straightforward. The European region is overly dependent on Russian oil.
Sample this. Between 2016 and 2020, Germany imported 32% of its crude oil needs from Russia. France’s 24% oil needs were sourced from Russia. Belgium’s dependency stood at 28% while the Netherlands’ was 28%.
Also, most EU countries depend on oil and gas for their energy needs. For instance, 36% of Germany’s energy consumption was from oil, followed by 26.6% from gas and 15.7% from coal. So, alternative sources of energy, such as solar and wind powers, are still in nascent stages.
The above numbers illustrate the high dependency of EU countries and especially Germany on Russia’s oil and gas.
Germany in Panic Mode
Germany’s Economy Minister Robert Habeck informed the nation that if the Russian gas levels continue to be low, then some industries may have to close down.
He raised the second “alarm” level on Germany’s action plan against gas shortage. Two more stages and the country will start to ration gas for its citizens.
In an interview with the Der Spiegel magazine, Habeck said that the poor gas supply will eventually hit companies and stop production, unemployment will increase, and citizens will go into debt.
Are Sanctions a Farce?
Europe had always been against imposing oil and gas sanctions on Russia. They have always argued that it will end up hurting them more than damaging Russia’s economy.
So, despite varying degrees of sanctions against Russia, the European Union continued to buy oil from them, which in turn enabled them to fund their war against Ukraine.
According to a Russian crude oil tracker maintained by Bruegel, and a payment tracker maintained by CREA, the European Union nations have paid Euro 64 billion since February 24, 2022, the day the Ukraine invasion commenced.
Data maintained by these two portals show that the United States has completely stopped purchasing oil from Russia, though their dependency was much lower to start with.
China has emerged as the single largest importer of Russia’s oil and that more than compensates for the losses incurred as some countries stopped buying from them.
Since the war broke out, Germany has imported 4,525 million Euros worth of oil, 10,540 million Euros worth of gas, and 313 million Euros worth of coal from Russia. Altogether Germany has imported 15,378 million Euros worth of fuel from Russia since the war broke out, the second-highest among all nations in the world.