What system are you using for fuel management? Depending on the system, the oxygen sensor sends a signal to the ECU, which is interpreted by the ECU to establish the air/fuel mixture at that moment, and in turn the ECU determines if there is an adjustment needed and what amount of fuel to deliver. Of course, this happens very quickly.
Ok, I am far from knowledgeable in the TS with Motronic set-up, since I live in the U.S., where these were never imported. (Hopefully, other BB members will chime in.) Nonetheless, I'm sure that the oxygen sensor in this set-up at least, is not needed. The oxygen sensor is needed only if you have a catalytic converter, and in that case, it is used by the ECU to prevent running too rich a mixture, which would ruin the cat. This is information that I gathered a while back from speaking with someone who is very familiar with the TS and Motronic set-up, but who does not post on this BB.