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Business

Energy Firms Seek New German Sources

The winter in Germany has been cold and the demand for heating oil and gas has risen sharply. To meet them, German oil and gas companies have had to increase production -- abroad.

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A potential scene on Germany's North Sea coast?

The company names are the same: ExxonMobil, BP, Total and Shell. The oil and gas multinationals are omnipresent. In Germany, they also have subsidiaries searching for oil and gas reserves both in the country and abroad. The demand is rising, particularly for natural gas.

Erdgas-Pipeline, Symbolbild

Thousands of kilometers of natural gas pipelines cross throughout Germany to end consumers

According to statistics from the German gas supplier, Verbundnetz Gas, natural gas consumption rose 40 percent from 1990 to 2003 in Germany. In the same time period, the use of natural gas for energy purposes increased from 15.4 percent of total energy consumption to 22.5 percent.

The increase creates incentives to tap into new sources. Germany has never been a rich country for natural gas and oil reserves, but one-fifth of the natural gas consumed by Germans is German.

But that is changing. The head of the German oil and gas producer association and director of ExxonMobil Germany, Gernot Kalkoffen, said that production in Germany is falling due to the depletion of the reserves already present. International pricing also plays a role.

"The development in Germany has fallen because of the strength of the euro and the uncoupling of the gas price from oil, so that in Germany, there hasn't been a price increase in natural gas for the producers," explained Kalkoffen.

Offshore attractive yet complicated

As gas and oil reserves drop in Germany proper, the producers have had to turn to increasingly more unconventional ways to win fossil fuels, such as extracting so-called tight gas from extremely dense layers of rock. Kalkoffen sees potential there, but offshore drilling in the North Sea is also attractive.

Offshore Windenergie Meer Blåvandshuk in Dänemark

Wind parks such as this one in Denmark have sprouted up and down the North Sea coast

Yet offshore drilling collides with operators of wind energy parks, and, naturally, environmentalists and German governmental environmental policies. Kalkoffen is still uncertain just what effect the nature reserve status of the North Sea coast is going to have on potential drilling there. On the German Greenpeace Web site, the demands are clear: No more drilling in the North Sea and more renewable energy.

In the meantime, the oil industry is turning to foreign oil and gas to satisfy demand. In 2004 alone, German natural gas production abroad rose 12 percent, a continuation of the trend in the last few years. Wherever there are reserves, German oil and gas producers are drilling -- North Africa, Libya in particular, North and South America, but also in other parts of Europe, such as the states of the former Soviet Union, said Kalkoffen.

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