Before the war, Gazprom provided about 60% of Germany’s gas consumption. The cutoff of supplies last year and the explosions on the Nord Streams, the shutdown of a number of industrial production facilities and the austerity measures Germans and other EU residents were forced to resort to had Russian propagandists showering them with derision. “With warm wishes”, Dmitrii Medvedev, deputy chairman of the Security Council, wrote wryly in August 2022, at the peak of European gas prices.
Since then, prices have collapsed 10-fold, and Germany has learned to do without Russian gas. Now 60% of consumption is provided by Norway. The largest gas producer in Europe, it became Germany’s main supplier right after Gazprom left. Since then, the parties have made several other agreements, and this week German state-owned energy company Sefe and Norway’s Equinor announced a €50 billion contract to supply about a third of Germany’s industrial gas demand.
This will bring Norway’s share to 60%, Reuters notes. However, such a heavy reliance on a single supplier carries risks, albeit not the same risks that were associated with Russia and Gazprom’s actions. The common political views of Germany and Norway reduce the likelihood of disruptions, but do not guarantee against technical problems, given the large network of pipelines linking Norway to the continent, said Henning Gloystein, an analyst at Eurasia Group. However, the extensive network adds reliability, he said: if necessary, the gas can be diverted through another branch.
LNG supplies have become additional sources of imports. Germany, in particular, has signed long-term contracts with the US ConocoPhillips and Venture Global. It has also reduced consumption, although its industry is still heavily dependent on electricity supplies from gas plants and gas as a raw material. As a result, average monthly gas imports are down more than 25% this year compared to last.
Germany plans to reduce its consumption even further in the future as part of the green transition. The deal between Sefe and Equinor envisages replacing gas with hydrogen supplies from 2029.
Meanwhile, the price of gas in Europe (Dutch TTF futures) is now around €34/MWh. This is 10 times lower than in August 2022, when it exceeded €340 (or about €3,600 per 1,000 cubic meters). Medvedev promised Europe gas at 5,000 euros per 1,000 cubic meters at the time, but immediately after his announcement, the price rushed downward.
This fall, the EU filled its gas storage facilities to the brim well ahead of schedule. With the start of the heating season, the reserves have shrunk, but not by much; they now hold 87.6 percent of the gas.
