The German government is sharpening its tone in the debate over refilling Germany’s natural gas storage facilities. Like the European Commission, the Economy Ministry stressed that there is currently no direct threat to security of supply this winter. Still, the fill level is currently low at around 50%. “The federal government is therefore preparing the necessary policy options so that they can be deployed quickly and in a targeted manner if the situation deteriorates,” the Economy Ministry said in a paper published on Thursday.
The European Commission sees no immediate danger to security of supply in the EU despite the slow build-up of natural gas reserves ahead of winter. Storage across the bloc is currently 62% full, Commission spokesperson Eva Hrncirova said. At the same time last year, EU-wide storage stood at 74%, according to data from industry group Gas Infrastructure Europe. EU countries are struggling to build sufficient inventories for the cold season. The reason is high natural gas prices as a result of the war by the U.S. and Israel against Iran, which is discouraging companies from buying the fuel. In Germany, the current fill level of just over 50% corresponds to about 123.4 terawatt hours. Alongside the Economy Ministry, the president of the Federal Network Agency, Klaus Mueller, recently urged gas traders to meet their responsibility for winter preparedness. A few days ago, Germany’s largest gas company, Uniper, also warned that without a resolution to the dispute over the Strait of Hormuz, Germany could miss its winter storage targets. By November, a fill level of 70% is being sought.
The Economy Ministry defended its restraint so far on state mandates. “Winter preparedness initially remains the market’s task,” it said. At the same time, it is monitoring the situation closely. “That means: no hasty interventions that drive prices higher or displace functioning market mechanisms, but also no simple wait-and-see approach.” If key risk factors were to worsen significantly and security of supply were at risk, the state could and would respond.
Industry sources say other EU states have long imposed tougher storage requirements on traders. This is leading to more injections in countries such as Italy or France, at Germany’s expense. The Economy Ministry’s reference that traders’ bookings are at roughly 74% says little because the purchase options do not have to be exercised.
Kerstin Andreae, chair of the German Association of Energy and Water Industries (BDEW), called for a change in behavior by major gas consumers. “Large gas consumers such as industry that have not secured their potential winter consumption, but instead rely on procuring volumes on the spot market, are exposing themselves to higher price and volume risk,” she said. “That is a conscious business decision and should be reconsidered at the current time.” For traders, this means they would have to store natural gas at a higher cost than can be sold via futures contracts. That carries the risk of losses, and there are economic limits.
Finance Minister Lars Klingbeil said at an SPD event in Bitterfeld-Wolfen that the government must continue expanding renewable energy, as well as grids and storage. Dependencies in gas storage only make Germany vulnerable.
(Reporting by Andreas Rinke, Christian Kraemer, Inti Landauro and Kate Abnett; edited by Scot W. Stevenson. For further inquiries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)