From gas to gas: Germany supports sanctions against the Russian energy sector

Germany is in favor of strengthening European sanctions against Russia's energy sector. This follows from the response of the German Economy Ministry to the Alternative for Germany party, which is available to Izvestia. The letter says that import restrictions in the energy sector are "crucial" in the confrontation against Moscow. The EU is now preparing the 16th package of sanctions, which may contain measures against gas imports from Russia. At the same time, the refusal from Russian energy carriers seriously hits the competitiveness of the European economy. This issue is causing a split within the EU - Hungary and Slovakia are against such steps.

Germany wants to strengthen energy sanctions against Russia

Germany is in favor of strengthening EU sanctions against the Russian energy industry. This is stated in a statement of the Ministry of Economy of the Federal Republic of Germany, sent in response to a parliamentary inquiry of the party "Alternative for Germany" to the German government. The country's economy is facing "serious structural challenges", including geopolitical tensions, including those related to the conflict in Ukraine, the ministry said in its response. However, to lift sanctions unilaterally, the German government is not ready.

"Import restrictions in the energy sector are decisive. Unilateral lifting of sanctions by the federal government is impossible. Both the imposition and lifting of sanctions can only be decided unanimously by all EU member states," the German economy ministry said.

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The ministry also said Germany has managed to overcome the energy crisis of 2022-2023, although gas prices in Europe remain relatively high.

"Access to all energy sources has been stabilized and the heavy dependence on imports of Russian resources has been eliminated. Wholesale electricity and gas prices have dropped significantly compared to the crisis years, although they are still significantly higher than the pre-crisis period," the ministry said.

At the same time, the ministry noted that sanctions against Russia will not be lifted as long as hostilities in Ukraine continue. The opposition, however, emphasizes that Germany as a state of the European Union, whose economy is suffering heavy losses, can formally refuse to extend the European sanctions.

- The federal government is trying to create the impression that Germany does not have the means to end sanctions against Russia. This is not true. Sanctions must be extended unanimously by EU member states every six months, otherwise they expire," Eugene Schmidt, a Bundestag deputy from Alternative for Germany, told Izvestia.

Hungary attempted to block the extension of EU sanctions against Russia earlier this year, but then Viktor Orban's government received energy security guarantees from Brussels. Budapest emphasized that the European restrictions hit the EU itself. At a meeting with AdG co-chair Alice Weidel Orban said that energy sanctions should be lifted. By the way, Germany, like Hungary, remains the largest consumer of Russian gas in Europe. According to estimates by the German environmental organization Deutsche Umwelthilfe (DUH), the share of our LNG in the total volume of gas purchases in the FRG in 2023 was between 3 and 9.2%.

The loss of cheap Russian energy resources has taken a tangible toll on the German economy and, above all, on industry. In 2023, Germany's GDP shrank by 0.3%, in 2024 - by 0.2%, reported the German statistical service. The main blow fell precisely on the manufacturing industry, which lost 3% of its volume. Energy-intensive industries are having a hard time digesting high prices, and the tendency to withdraw enterprises to other jurisdictions is growing, Vladislav Belov, head of the Center for German Studies at the Institute of Europe of the Russian Academy of Sciences, told Izvestia.

- German business is demanding the lifting of sanctions and a return to Russian gas purchases, but politicians are not ready to go along with such measures. The parties that aspire to get into the government do not follow the demands of business," the analyst said.

What sanctions against Russian gas the EU is preparing

So far, imports of Russian gas, including LNG, are still allowed. At the same time, the EU is gradually preparing the ground for tougher sanctions - they are already discussing the 16th package: on February 4, the post-prime ministers of the Union exchanged views on this issue. European Commissioner for Foreign Affairs Kaja Kallas said that she expects the adoption of the next package of sanctions by the end of February.

At the same time, the media reports that the new list of restrictions may include a ban on imports of aluminum and gas, both pipeline and LNG. This initiative was put forward late last year by ten countries: Denmark, Ireland, Latvia, Lithuania, Poland, Romania, Czech Republic, Sweden, Finland and Estonia. They believe that restricting the access of Russian blue fuel to the EU market will reduce Russia's budget revenues.

However, according to Politico, the EU will not completely ban LNG imports from Russia as part of the 16th package of sanctions. Instead, the European Commission will propose to stop its flow to EU terminals that are not part of the bloc's gas system. According to Rystad Energy, EU imports of Russian LNG in 2024 totaled nearly 17.8 million tons compared with 15.1 million tons a year earlier. Gas deliveries via pipelines in 2024 rose 14% to 32.1 billion cubic meters, according to data from Gazprom and the European Network of Gas Transmission System Operators.

Restrictions against energy carriers from Russia cause discontent in Slovakia and Hungary, which depend on one route - Turkish Stream. They have no access to the sea for cheaper LNG, and other sources are cut off with the termination of gas transit through Ukraine from the beginning of 2025. Under these circumstances, Bratislava is putting pressure on Kiev to resume pumping gas through Ukrainian territory. Among other things, Slovakia may block the introduction of a new package of sanctions if Ukraine does not make concessions.

At the same time, there is now a sharp rise in gas exchange prices in the EU. On Wednesday, trading on the "day-ahead" contract at the benchmark European hub TTF opened at $627 per 1,000 cubic meters. This is the maximum price level for the last more than two years (since February 7, 2023). Among the reasons are deteriorating weather, the cessation of transit through Ukraine and rapid consumption of underground storage facilities, Stanislav Mitrakhovich, an expert at the National Energy Security Fund and the Financial University under the Government of the Russian Federation, told Izvestia.

- All this negatively affects the competitiveness of European industry, primarily metallurgy and machine building. If the European Commission introduces a ceiling on gas prices, it will cause a negative reaction from Qatar and other exporters," the expert said.

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EU countries consistently impose restrictions against the Russian energy sector. In December 2022, a partial embargo on oil supplies from Russia came into effect, as well as a price ceiling. An exception was made for deliveries through the Druzhba pipeline, through which Slovakia, Hungary and the Czech Republic receive oil. Bratislava and Budapest may be granted an exception if sanctions against gas imports are imposed. However, restrictions against Russian energy would lead to new price increases in the EU, as well as to a decrease in industrial production and GDP.