Government ‘sharpens toolbox’ for energy supply security

27 April 2022

Germany’s federal government has sharpened the tools available to combat the escalating crisis on the energy markets by updating its 1975 Energy Security Act. The amended law will allow the government to issue ordinances that put companies operating critical infrastructure under trusteeship, and if security of supply cannot otherwise be guaranteed, expropriation of such companies will also be possible.

A number of both gas reserves and oil refineries in Germany are owned and operated by Russian companies. Economy and climate minister Robert Habeck said Russia’s war against Ukraine has led to a tense energy situation: “Prices are high, uncertainty is great, risks are present. … It is a matter of doing everything possible to maintain basic supplies.” The law also prescribes that gas storage facility closures now have to be notified and approved by the Federal Network Agency (BNetzA). Furthermore, price adjustment rules along the entire value chain are to be permitted in the event of a gas delivery shortage. “The aim of these price adjustment regulations is to maintain market mechanisms and supply chains as long as possible and to prevent cascading effects,” the ministry states.

In view of Vladimir Putin’s war on Ukraine, the European Union is considering an embargo on Russian oil and the German government has said that it will cancel all Russian oil imports by the end of the year. Minister Habeck is in discussions in Poland to cover alternative import routes for oil. Crude oil imports from Russia accounted for about 35 % of Germany's oil consumption last year; the refineries of Schwedt and Leuna in eastern Germany, which obtain their crude via pipelines from Russia, are particularly dependent. While in Poland, the dependence on Russian oil is 64 %.

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