There has been enormous growth in German-Russian energy trade to date.
Both Russia and Germany benefit from increased cooperation on energy issues.
1. Forecast for the oil and gas industry
Delays are to be expected with the Nord Stream 2 pipeline. Construction has stalled, and we don’t know how much gas will ultimately be routed through Ukraine or what compensation will be paid for reduced transit volumes.
Germany would have to decide on the parameters of its domestic energy market. Of particular importance is the shape and structure of Germany’s own electricity market. This would include a detailed analysis. The focus should be on the extent to which Germany is able to provide enough electricity from wind and solar power to meet the needs of industry and commerce. Both industry and commerce require a constant supply to ensure production volumes. After all, Germany is a major producer of industrial products for the rest of the world. Energy costs are fixed costs for heavy industry and thus remain an important cost factor.
2. Great potential for a larger Euro-Asian power grid and the Silk Road Initiative.
Will Germany participate in more far-reaching initiatives, in the manner of a far-reaching transnational energy cooperation? Such an initiative could eventually develop into a Eurasian power grid. This has been proposed at various stages by various intergovernmental bodies and governments themselves.
At this stage, it is difficult to say whether there will be such an initiative in the future. There are different opinions within Germany and in the broader context, the European Union. But we are seeing the first hints of a pan-Eurasian power grid. Right now, China is connecting the Eurasian continent through various energy and telecommunication networks, which is closely related to the Silk Road initiative.
Both Russia and Germany may have an interest in participating in this initiative, but to different degrees. Such an initiative can facilitate and promote trade with neighboring countries. Energy costs can be reduced due to economies of scale and competitive advantages of each party within this framework.
3. Russia’s energy outlook looks bright
Russia will continue to be a major energy exporter to Europe and to East Asia. The growth of the East Asian economy simply gives Russia another leg to stand on, helping to diversify its sources of income. This is important because it gives Russian energy companies the long-term security of agreements. This allows Russian energy companies to invest in new projects that require more capital to invest, which in turn provides energy security for energy buyers. Russia performs very well in all energy sectors, and these include uranium, coal, oil, gas, hydropower, solar energy. Russia will maintain this enviable position in the energy industry in the 2020s, 2030s, and 2040s and remain a major exporter of energy commodities.