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Germany's Continuing Drop in Oil and Natural Gas Production

Germany's Continuing Drop in Oil and Natural Gas Production

Apr 16, 2024

Germany's Continuing Drop in Oil and Natural Gas Production

According to the Bundesverband Erdgas, Erdöl und Geoenergie (BVEG), the German oil and gas industry association, the country's production of oil and natural gas experienced a significant decline in 2023 when compared to the previous year. The association released these findings in a report on Tuesday, highlighting the continued downward trend of domestic energy production.

In 2023, Germany's oil production fell by 5.9% from the prior year, while natural gas production decreased by a more substantial 10.4%. BVEG data revealed that domestic gas supplied just 5.7% of the total German supply, and domestic oil production accounted for approximately 2.2% of the nation's oil consumption.

Historically, Germany's oil and gas production reached its zenith in the 1960s for oil and the 1990s for natural gas. Since those peak years, output has steadily declined, leading to a greater reliance on imported energy sources to satisfy domestic demand.

Ludwig Möhring, Managing Director at BVEG, stressed the environmental and security benefits of increasing local production during a press conference. "We should maximize domestic oil and gas production, which would be extracted with 30% lower emissions compared to LNG imports," Möhring asserted. He emphasized that higher domestic output would strengthen supply security and diminish the need for imports.

The BVEG serves as an umbrella organization for entities involved in the German energy sector, including affiliates and joint ventures of global energy corporations such as ExxonMobil, Shell, Neptune Energy, and Wintershall Dea.

In response to the changing energy landscape, Germany's imports of natural gas dropped significantly in 2023. The country imported 968 terawatt hours (TWh), marking a 32.6% decrease from the 1,437 TWh imported in 2022, as reported by Bundesnetzagentur, the German energy regulator. Consumption patterns also shifted, with Norway emerging as the leading supplier of natural gas to Germany, providing 43% of imports. The Netherlands and Belgium followed with 26% and 22% respectively.

The impact of the energy price surge has cast doubt on the recovery of Germany's industrial sector. According to the chief executive of RWE, Germany's top utility company, achieving pre-crisis levels of competitiveness remains uncertain, as stated in an interview with the Financial Times last week.

Financial Times

As the situation evolves, the future of Germany's energy security and economic competitiveness may hinge on the strategic decisions made regarding domestic production and the broader energy mix. The BVEG's latest report underscores the critical crossroads at which the German energy sector stands.

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