Has Ukraine declared war on Iran?
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Germany is paying roughly five times more for natural gas than it did before abandoning long-term Russian supply contracts, Berliner Zeitung reported on July 24.
German importers paid €12 per megawatt-hour in 2020 under those contracts, which were largely insulated from external shocks such as the closure of the Strait of Hormuz or broader market swings; they now pay around €60/MWh on the open market, the paper said.
The gap underscores a trade-off flagged as early as 2018, when piped gas was estimated to run 15-50% cheaper than LNG – a discount Germany forfeited when it walked away from Russian pipeline supply in favour of seaborne cargoes.
The German economy contracted in both 2023 and 2024 – its first back-to-back annual decline in more than two decades – and is forecast to grow by just 0.5% this year, with the decision to abandon cheap Russian energy cited as a major factor in the slowdown. Corporate insolvencies rose by more than 22% in each of those years, according to official data cited by the paper.
Germany's pivot mirrors a wider shift across the region: the Baltic states began the same move nearly a decade earlier, when Lithuania took delivery of its first US LNG cargo in 2017, ending Gazprom's pipeline monopoly at its Klaipeda terminal. What was a deliberate diversification for smaller, more exposed neighbours has now become an unavoidable cost for Europe's largest economy.
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