The two men, snatched at gunpoint by men in army uniforms, were shown surrounded by four masked men brandishing assault rifles from a group calling itself Ansar al-Tawheed wal Sunnah (Followers of Unity and Prophetic Tradition).
No demands from the captors were apparently issued but al-Jazeera television, which showed the video, said the men pleaded for the German government to intervene to secure their release.
"The first contact was made by the kidnappers," German Foreign Minister Frank-Walter Steinmeier told RTL television of the video. "We cannot give any further details about the group."
German Chancellor Angela Merkel said: "The German government condemns this cruel kidnapping in the strongest terms.
"The lives and the safety of our compatriots is of the highest priority," she said, adding that Germany was working closely with various bodies to secure the release of the two men.
Rene Braeunlich and Thomas Nitzschke were seized Tuesday in the restive northern oil city of Baiji.
The video comes in the midst of an upsurge in abductions of foreign hostages, with around 250 foreigners kidnapped since the March 2003 invasion.
Brazilian engineer Joao Jose Vasconcellos was kidnapped a year ago from the same Baiji plant, and his fate is still unknown.
Most recently attention has been focused on US reporter Jill Carroll, who was seized in Baghdad on January 7 and appeared in a video shown on al-Jazeera a week later.
Her captors, according to al-Jazeera, demanded that all female detainees in US custody in Iraq be released within 72 hours.
On Thursday, a week after the deadline expired, US authorities released five of the nine female prisoners in their custody along with more than 400 other inmates, though they maintained it had with no link to Ms Carroll's case.
Last week, two Kenyan telecommunications engineers were kidnapped in Baghdad in a raid on their convoy that left at least 10 people dead.
Political trading
The hostage crises came as Iraq's political parties were beginning talks on forming a national unity government, six weeks after the election for the first permanent post-Saddam Hussein parliament.
Vice President Adel Abdel Mahdi said the dominant conservative Shi’ite coalition would soon submit its candidate for prime minister.
Three groups that have a combined 80 seats in the 275-member parliament agreed on Friday to unite, said liberal Sunni politician Adnan Pachachi, who ran on the secular list of former prime minister Iyad Allawi.
Along with Mr Allawi's 25 seats, the group will include the religious Sunni National Concord Front with 44 seats, and the more secular Sunni National Dialogue Front of Salah al-Mutlak which has 11 seats.
The group will also be talking to the 53-seat Kurdish bloc and other small parties.
A Western diplomat in close contact with the various parties said the new government would not be formed until late March at the earliest.
A key bone of contention is the issue of federalism. Shi’ites and Kurds are looking for autonomous regions in the oil-rich north and south, which Sunnis fear will leave them destitute in the resource-poor central region.