Germany, the largest economy in the European Union, is known for advocating a shift away from oil and gas. Despite this commitment, the country remains one of the biggest importers of liquefied natural gas. Recently, Germany expressed a desire to significantly increase its crude oil imports from Kazakhstan.
This week, reports surfaced indicating that the German government has requested Kazakhstan to more than double its crude oil exports to Germany, increasing from 1.2 million tons to 2.5 million tons. This request equates to approximately 18.32 million barrels for the current year. Kazakhstan’s Energy Minister Almasadam Satkaliev confirmed this, stating, “We plan to export 1.2 million tons to Germany by the end of the year, and there is a request from their side to increase this to 2.5 million tons in total.” However, he did not confirm if Kazakhstan could meet this request, noting that the country plans to ship an additional 1.5 million tons of oil to Europe via the Baku-Tbilisi-Ceyhan pipeline, which ends in Turkey.
This request raises an important question: Why is Germany asking for more crude oil if it is committed to an energy transition and decarbonization?
Currently, solar energy contributes 38% to Germany’s energy mix, surpassing the combined total of 28% from coal, oil, and gas, according to GlobalData. Germany has made strides in decarbonization and electrification. Electric vehicle (EV) sales increased by 11% last year, making up 18.4% of new car sales. However, the trend toward electrification has reversed this year after the government eliminated EV purchase subsidies in December.
Despite the existing EVs on the road, oil demand in Germany has been impacted differently than expected. Earlier this year, UBS estimated that the shift to electric transport has reduced global oil demand by 1 million barrels per day (bpd), a trend expected to continue. The bank predicts that by 2025, electrification could displace 2.5 million bpd in oil demand. Yet, Germany, the largest EV market in Europe, is requesting more oil from Kazakhstan.
Interestingly, oil consumption in Germany has been declining. In 2012, the country consumed about 2.28 million bpd. By 2023, this figure had dropped to 1.95 million bpd. While a decrease of 330,000 bpd over 11 years may not seem significant, it still indicates a trend.
However, Reuters reported in April 2023 that Germany’s crude oil imports increased in 2022 compared to the previous year, as the economy rebounded from pandemic-related lockdowns. This suggests a direct link between economic recovery and crude oil consumption, particularly as Germany imported a substantial portion of its oil from Russia despite ongoing EU sanctions.
The recent request for more Kazakh oil suggests a recognition that while energy transitions are important, the need for cheap and reliable energy for industrial purposes remains critical.
Germany’s economy shrank by 0.3% last year, with businesses attributing the decline to high energy prices amid the expansion of wind and solar energy. The government has acknowledged these high energy costs and proposed increasing wind and solar capacity as a solution. Forecasts indicate that the economy may contract by another 0.1% this year, further highlighting that the EU’s largest economy is now among its weakest. In this context, ramping up oil imports appears necessary.
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