On April 8th 2022, the European Union issued a fifth round of sanctions
against Russia. "And, ladies and gentlemen,
I think that measures on oil, and even gas, will also be needed sooner or later." Did you get that? “Even gas will also be
needed sooner or later” In other words, not now. Since the war in Ukraine began, the EU has imposed sanctions
that restrict the flow of Russian money, and goods... they’ve targeted banks, companies, individuals... But natural gas remains untouched. The EU gets nearly a quarter
of its energy from gas. And nearly half of it comes from Russia:
the world's largest gas exporter. Russia delivers the vast majority of its gas to
Europe through this network of pipelines. And as the EU’s largest economy, nobody
buys more of it than Germany. Since the invasion of Ukraine began, Germany has paid Russia about 220 million
euros a day for gas. Germany uses gas to heat
more than 20 million homes. And to power a lot of the country’s industry. And Germany’s government has
spoken out against sanctions that would limit the flow of it. "It's not possible...to cut the gas supplies." But with every payment Germany makes to Russia’s
state-owned natural gas company... it’s also paying for Russia's war. So, how did Germany become so
dependent on Russia for something as vital as their energy supply? And why can’t they quit? Germany was at the literal center
of the Cold War. After World War II, a fortified border
separated independent West Germany from East Germany and other Soviet
satellite states. WWII had left Germany in ruins. But by the 1950s West Germany was
experiencing a remarkable economic recovery. German industries like steel prospered. But they needed more energy to power
their growing economy. Meanwhile, over here in western Siberia the Soviet Union had just discovered
huge natural gas reserves. They had a network of pipelines to supply
major Soviet cities, but extending their pipelines to potential
customers in Europe would be a huge infrastructure project. Then, in 1969, West Germany elected
a chancellor with a new foreign policy called Ostpolitik, focused on bringing the two sides closer together
through dialogue and deals. Energy provided a great opportunity. And West Germany and the Soviet Union
struck a deal. The Soviet Union would supply West Germany
with natural gas. And in return, West Germany would provide
high quality steel pipes to extend the pipelines. It was a major 20-year deal. To get how this deal locked Germany in, it’s important to understand what makes
piped natural gas different from other energy sources. Natural gas, with coal and oil,
is one of the three main fossil fuels used around the world. But unlike coal and oil, which can
be shipped or rerouted worldwide, piped natural gas is a regional product that
depends on proximity. To transport it, gas producers spend
millions of dollars to build pipelines that connect
producers and buyers. Because these pipelines are such
big and permanent commitments, gas deals can link a buyer’s energy infrastructure
to the sellers for decades. By the 80s, the Soviet Union built this
pipeline network to Europe. And by the 90s, it was supplying Germany
with 40% of its gas. Then, the Soviet Union collapsed. Russia’s state-owned corporation, Gazprom,
took over the old Soviet gas pipelines. But, the map had been redrawn. Russia's main pipelines now ran
through a newly independent Ukraine, putting a key part of their gas infrastructure
on land they no longer controlled. So, in order to diversify the routes to Germany,
Russia began building new ones. In 1999, they finished this pipeline
that ran through Belarus. And in 2005 they began building
the Nord Stream pipeline along the Baltic Sea to reach Germany directly. They also built pipelines inside Germany. And opened a subsidiary there to operate
gas storage facilities. Including this one here, one of the largest
in Western Europe. Russia now had three
routes reaching Germany, as well as pipelines and storage
facilities inside Germany. The gas trade was strong. But it had also changed Russia's
relationship with Europe. At the end of 2008, gas price negotiations
between Russia and Ukraine fell apart. A few days later, Russia cut off gas
to Ukraine for 20 days. The thing is, because Ukraine was
a major transit country, when Russia cut off their gas, they cut off
a lot of European gas too. As a result, all these countries saw a drop
in their supply, and tens of thousands lost heat. In Poland, at least eleven people
froze to death. All this put Europe on alert. It was now clear that through gas flows,
Russia held immense power over Europe. But, up here, another link to Russia was in
the works: Nord Stream 2. A new 11 billion dollar pipeline to run alongside
the first Nord Stream and double the capacity to Germany. Then, in 2014, Russia annexed Crimea
and invaded Eastern Ukraine. In response, the EU issued a series of sanctions. Some countries began to wean
themselves off Russia’s gas. But Russian gas kept flowing to Germany. In fact, Germany imported more gas
than ever before. Today, as Russia’s atrocities in Ukraine
continue to shock the world, pressure on Germany is mounting. But replacing Russia’s gas isn’t easy. Because it’s been piped to homes
and businesses for decades, without a major infrastructure overhaul,
Russian natural gas can only be replaced
with other natural gas. And Germany’s options for that are limited. The largest European natural gas reserve, here
in the Netherlands, is closing this year. Gas from Algeria and Libya is increasingly
used in those countries. Most of what is pumped to Europe
goes to Italy and Spain. And a southern gas corridor connecting
Azerbaijan to Europe is not transporting as much as expected. The other option is Liquified Natural Gas
or LNG. That’s gas that’s been cooled until it
becomes liquid and can be transported in these massive ships from anywhere in the world. But It’s a time-consuming and expensive
alternative that requires a lot of new infrastructure. In the last two decades,
European countries have built LNG terminals along
their coasts. Germany plans to open 3
in the next 5 years. But as of today, doesn't have any. Replacing natural gas and all fossil fuels
with renewables is Germany’s ultimate goal, but that requires a massive
and expensive transition that won’t be complete until 2035. Meanwhile, at home, Germans
are demanding action. According to this poll, the majority of Germans
support a boycott of Russian gas. But economists predict that cutting gas imports
could cause an economic recession that could cost hundreds of thousands of jobs. But they have taken some steps. The Nord Stream 2 pipeline was canceled. They have also reduced dependence
on Russia's gas by 15%. And have taken over the Gazprom subsidiary
that runs gas operations in Germany. But the government and business leaders continue to push back against
sanctioning gas entirely. Germany is stuck. And the stakes are now higher than ever.
