Oldenburg. Rapidly rising energy prices are probably the most discussed and controversial topic in Germany and Europe at the moment. Russia's war of aggression against Ukraine has ended decades of supply relationships - especially for natural gas. This has led to enormous price increases, which are placing a heavy burden on private households and companies.

The "Sound of Science" event format of the University Society (UGO) made this development the topic of a very prominent discussion event in the Alte Fleiwa on 25 October. Almost 200 guests attended, meaning the event was fully booked. The evening was accompanied by music from the band "Sound of Science".

Prof Werner Brinker, Chairman of the UGO Executive Board, welcomed the following panellists. Prof Dr Klaus-Dieter Maubach (Chair of the Management Board of Uniper), Sebastian Jurczyk (Chair of the Management Board of Stadtwerke Münster), Hermann Schüller (Managing Partner of Semco Glas, Westerstede), Dr Sven Orlowski (Chair of the Management Board of EWE Trading) and Konstantin Herzog von Oldenburg (Managing Director of VNG Handel und Vertrieb GmbH).

The evening was divided into four thematic blocks:

• A look back at the development of natural gas business with the Soviet Union
• The changed market due to liberalisation
• Effects of the Ukraine war on the market
• Outlook for the future energy supply (energy transition)

Détente policy and the natural gas pipe business

The evening began with a keynote speech by Klaus-Dieter Maubach on the German economy's first natural gas pipe business with the Soviet Union. "These would not have been possible without the policy of détente in the 1970s, which was initiated by Williy Brandt and Egon Bahr," said Maubach.

What led to a strong dependence on one supplier until the end of 2021 was always politically flanked in the respective steps - "regardless of whether the Federal Chancellor was provided by the SPD or the CDU", emphasised Maubach.

Both sides have benefited from this, Germany through a reliable and relatively cheap supply of natural gas, the Soviet Union and Russia through the corresponding payments. Most recently, this totalled 25 billion euros per year. This purchase was also a reliable business model for Leipzig-based VNG for decades, added Konstantin Herzog von Oldenburg. Many of VNG's major customers (up to 400 municipal utilities) had benefited from this for a long time.

Klaus-Dieter Maubach answered the question from the audience as to why this strong dependency had ultimately come about and why LNG terminals had not been built earlier: "We made many attempts with Uniper to build an LNG terminal, and another attempt only failed in 2019. We simply didn't find any customers who were interested in this offer and it wouldn't have been worthwhile for us to invest."

In addition, the production volume in the Netherlands has been reduced and production in Germany is also declining, which has also contributed to Russian gas playing an increasingly central role.

Liberalisation of the gas market

In the second block, which dealt with the liberalisation of the natural gas market from 2003, moderator Werner Brinker then interviewed Sven Orlowski, Hermann Schüller and Sebastian Jurczyk.

For Orlowski (EWE), it was clear that there were now many more players on the market, which posed considerable challenges for procurement. It is necessary to react faster and faster in order to balance out price fluctuations as far as possible.

Werner Brinker summed it up in a nutshell: "The trading mechanisms have changed, there has been an increasing shift from the long term to the short term.

The current sharp rise in gas prices is causing enormous costs, for example in energy-intensive glass production. Hermann Schüller put the increase in costs at Semco Glas at around €150 million in total. He therefore called on politicians to "set stable framework conditions".

Sebstian Jurczyk spoke about the purchasing policy of Stadtwerke Münster. Here, gas volumes are purchased at different times - spread over around three years. This is intended to minimise the risk of purchasing at too high a price.

"We are working on achieving an average price to cushion the price fluctuations," says Jurczyk.

The war in Ukraine and its effects

The effects of the war in Ukraine were the topic of the third block.

The prices for natural gas (but also for crude oil) have risen sharply since the start of the war, in some cases tenfold. In this context, Werner Brinker raised the question of the measures taken by the German government, in particular the attempt to combat the price increase with a gas levy.

"The German government's initial reaction to introduce a gas levy was understandable," explained Klaus-Dieter Maubach. Despite the war, Uniper had counted on further supplies from Russia and relied on almost 50 years of contractual fulfilment. With these deliveries, the gas levy would indeed have been suitable to offset the company's losses; Uniper had applied for 23 billion euros from the gas levy. However, when the deliveries failed to materialise, the company's financial situation deteriorated dramatically and ultimately the only way to prevent insolvency was for the German government to acquire a majority stake. With its supplies from Russia, Uniper accounts for around a quarter of total gas consumption in Germany.

For Hermann Schüller, a cap on the price of gas is necessary in order to be able to calculate reliably. It is sometimes much cheaper abroad, so Semco should also consider relocating parts of its production.

Instead of the unintroduced gas levy, attention is now focussing on a gas price brake, which is intended to provide financial relief for consumers and companies.

For Stadtwerke boss Jurczyk, the concrete implementation of the gas price brake is above all an enormous task for the IT departments at the energy companies. The aim is to find a way to completely relieve customers of the discounts in December and then implement further relief steps from March.

He does not believe it is possible to bring forward the gas price brake to January.

The situation has already meant that it is not possible to take on new customers without problems. "This is because we have to buy very expensive gas for these customers, which ultimately increases the price for everyone. This would put our long-standing customers at a disadvantage, and we wanted to avoid that." We have therefore introduced a separate tariff for new customers.

Outlook: New suppliers and expansion of renewables

All panellists agreed that the expansion of renewables should be greatly accelerated. "The decarbonisation of the economy continues to be a key issue, climate change is also becoming increasingly noticeable in Germany, and we got a taste of it in the summer," said Maubach.

However, this requires enormous speed, as Werner Brinker explained using the example of offshore wind energy. So far, 8 gigawatts of installed capacity are available there, and the German government plans to increase this to 30 gigawatts by 2030.

However, when it comes to finding new suppliers to replace Russian pipeline gas, new problems and downsides are already emerging. This is because comparatively rich Europe has bought LNG from the market, which is now lacking in poorer countries.

Brinker asked whether it was therefore not also necessary to take care of the conditions in the countries of origin. This is the right thing to do and is happening, said Maubach. His example is the "Bettercoal" initiative, which campaigns for better working conditions for miners.

This path will also have to be taken in the future. "It won't save the world, but it will help to make it a better place."

In his closing remarks, Werner Brinker thanked all the panellists and saw numerous suggestions for further discussions. After all, it seems certain that a secure energy supply, the expansion of renewables and energy prices will remain one of the key issues in the coming years.

Moderated the evening with commitment and expertise: Prof Werner Brinker, Chairman of the Executive Board of UGO

The "Sound of Science" event on 25 October was supported by the following sponsors:

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