ZEW Energy Market Barometer – Experts Unperturbed by the Dependency on Russian Oil

Multiple concerns have recently been raised about how the European Union's energy supply is subject to the political mood in Russia due to import dependency. According to most experts interviewed for the ZEW Energy Market Barometer, however, the large imports of Russian oil are no cause for concern. Gas dependency is viewed more seriously. Still, the experts do not fear for the immediate supply security.

ZEW Energy Market Barometer is a biannual survey among more than 200 experts from energy supply companies, energy-trading companies, and energy service providers, who are asked to give their expectations concerning short and medium-term developments on the national and international energy markets. The survey is conducted by the Centre for European Economic Research (ZEW), Mannheim.

About 77 per cent of the experts do not consider the large imports of Russian oil a thread. When asked if import dependence on Russian oil was a cause for concern, 15 per cent answered with a clear "no", whereas 62 per cent opted for a "rather no". Merely a total of 23 per cent is critical of the import dependency. In general, the experts rather seem to be worried gas. Only a slim majority of about 53 per cent believes that large imports of Russian gas pose "no" (nine per cent) or "rather no" (44 per cent) problem. By contrast, 47 per cent answered the question about the danger of gas dependency with "yes" (17 per cent) and "rather yes" (30 per cent).

The different estimations can be put down to various reasons. In Germany, oil is the largest component of the primary energy mix (36 per cent), followed by natural gas (22 per cent). Approximately 34 per cent of German crude oil imports are Russian. However, what is more important than Russia’s large contribution to German oil supply is that natural gas cannot be transported as flexibly as oil. Whereas oil is often transported in vessels, gas transport is still, to a great extent, tethered to pipelines. That makes it very hard to switch providers at short notice and it seems less realistic to briefly purchase natural gas from other important supplier countries (35 per cent from Russia but also 24 per cent from Norway, and 19 per cent from the Netherlands) or even extend domestic extraction (16 per cent). Hence, Germany can only benefit from taking other potential gas exporters into long-term consideration.

Contact

Dr. Ulf Moslener, E-mail: moslener@zew.de