Germany's Scholz says Russian energy only way to secure European supply

German Chancellor Olaf Scholz said March 7 that Europe needed Russian energy to ensure security of supply, saying Europe had "deliberately" excluded sanctions on the sector.

In a statement, Scholz said Germany welcomed all international efforts to respond to Russia's invasion of Ukraine, but that there were no alternatives at present to Russian supplies.

"Europe deliberately exempted energy supplies from Russia from sanctions," Scholz said.

"There is currently no other way of securing Europe's supply of energy for heating, for mobility, for power supply and for industry," Scholz said.

"It is therefore of essential importance for general services and the daily life of our citizens."

There have been growing calls for a full European embargo on Russian oil and gas imports, but there have also been concerns that such a ban could lead to even higher prices and more chaos on markets.

Scholz said the German government had been working for months with its partners within the EU "and beyond" to develop alternatives to Russian energy.

"But that doesn't happen overnight. It is therefore a conscious decision on our part to continue the activities of companies in the field of energy supply with Russia," he said.

Germany's Wintershall Dea, for example, continues to work together with Russia's Gazprom on gas production at major projects in Russia including the Achimov formations of the Urengoy gas field and the Yuzhno-Russkoye gas project.

Scholz's comments come after German economy minister Robert Habeck said March 3 that he would oppose a ban on imports of Russian oil, gas and coal on the grounds that halting supplies from Moscow would endanger "social peace" in Germany.

But with Scholz now pushing the point for Europe as a whole, EU-wide sanctions against Russian energy supply seem unlikely.

The International Energy Agency said last week that the EU imported 155 Bcm of Russian gas in 2021, accounting for around 45% of EU gas imports and close to 40% of its total gas consumption.

In terms of oil, Russia's Urals grade has the biggest share of Europe's market for crude, supplying about a quarter of its oil and condensate imports.