Germany is entering the winter with gas stores well below target, leaving Europe's biggest economy and potentially other EU countries vulnerable to further price surges and market shocks. Germany's 250 TWh of gas storage facilities are about 62 per cent full, well behind a statutory requirement for infrastructure operators to fill them to 80 per cent before the heating season. The EU as a whole is also entering the winter with gas reserves well below historic norms, with stores across the bloc just below 75 per cent full.
Germany is the EU's biggest gas user and has the largest storage facilities, meaning its need to keep buying gas on spot markets could push up prices for other countries. Gas storage typically provides up to a third of EU gas demand during winter. While policymakers insist the 27-country bloc does not face gas shortages this winter, benchmark European prices on Wednesday surged above €100 a megawatt-hour for the first time since December 2022. EU energy commissioner Dan Jørgensen said the bloc did not expect a security of supply issue as such, but for citizens struggling to pay their bills, that might not matter.
A senior Italian official accused Germany of burdening the rest of the bloc by failing to meet its storage target. Italy's gas stores are 91 per cent full after the country paid €300mn to ensure sufficient reserves. Unlike some other EU countries, Germany chose not to force storage operators to fill up over the summer, relying instead on market incentives. Prices stayed high through the summer due to disruption to supplies through the Strait of Hormuz and heatwave-driven demand for gas-fired electricity.
Germany's economy ministry acknowledged it would miss the target, citing the Strait of Hormuz conflict and subsequent price increases. It said that, unlike 2022, the country now has far more options, including liquefied natural gas terminals built after the crisis and a closely interconnected European system. Energy minister Katherina Reiche had ordered state-owned Sefe to buy and store more gas by mid-December. Sebastian Heinermann of INES said the failure showed that future storage must be secured through more binding measures.
Source: Financial Times Companies · Summarized by HeadlinesBriefing