He risk of gas shortage this is one of the scenarios Germany faces this coming winter if temperatures drop sharply and its storage facilities fail to accumulate sufficient reserves before November, currently, German storage facilities are at 54.52 % of their capacity. The INES storage operators’ association estimates they could reach a maximum of 77 % by November 1st, a level higher than the government’s current target, but still lower than the usual volume for that time of year.
Germany’s gas reserves are slowly increasing
However, reaching 77 % capacity is not guaranteed either, Sebastian Heinemann, director of INES, pointed out that it would be necessary to maintain an injection rate close to 1 terawatt-hour (TWh) per day until the beginning of November. For the past few weeks, the filling rate has remained below that level, data from Gas Infrastructure Europe shows that German facilities are receiving approximately 900 GWh per day.
If this trend continues, Germany’s gas storage could reach nearly 63 % by November 1st, this level would reduce the available buffer to cope with prolonged periods of low temperatures and increase dependence on new supplies during the winter. The situation is particularly significant given the weight of Germany within the European energy market, the country is the largest gas consumer in the European Union and, at the same time, has the largest storage capacity in the bloc.
Risk of gas shortages increases ahead of a cold winter
Temperature trends will be crucial in determining whether available reserves can meet gas demand throughout the heating season, in a mild winter scenario, INES estimates that starting November with reservoirs at 77 % capacity would allow for sufficient seasonal consumption. Under these conditions, Germany would still have approximately 38 % of its reserves remaining on April 1st.
The situation would change if temperatures were lower than expected, a colder winter would accelerate the withdrawal of gas from storage facilities and increase pressure on the system, for some days in January, the difference between demand and available supply could reach up to 25 %. Therefore, the risk of gas shortages in Germany will depend both on the volume accumulated over the coming weeks and on the intensity and duration of the cold weather between December and January.
Europe maintains higher storage levels
While Germany is trying to increase its reserves, the European Union’s gas storage is approaching 70 % of capacity, however, the situation varies significantly among member states. Portugal and Poland, for example, are already operating at over 90 % capacity.
Comparing only percentages can provide an incomplete picture, the size of the German market and its high demand mean that the country needs large physical volumes of gas to cover residential, industrial, and energy consumption during the winter months. For this reason, the evolution of German storage levels can have consequences beyond its borders, any pressure on the country’s supply could also become a relevant factor for the balance of the European gas market during the winter season.
LNG prices are slowing down storage
Adding to the pressure on reserves is the behavior of the liquefied natural gas market, European buyers have shown less urgency to acquire LNG for winter storage due to high prices. Traditionally, Europe takes advantage of the summer months to buy gas at lower prices and fill its tanks before the increase in heating demand, this year, that dynamic has proven less favorable.
The tensions arising from the war in Middle East and while increased energy consumption in various regions has contributed to keeping LNG prices high, Europe has also experienced periods of higher than usual temperatures, which has increased energy demand. Added to this is international competition for liquefied natural gas shipments, which limits the ability of European buyers to quickly increase their inventories when market conditions are unfavorable.
Germany enters crucial weeks for its reserves
The coming weeks will be crucial in determining Germany’s safety margin at the start of the heating season, reaching a storage level close to 77 % would reduce exposure to a normal winter, although the country would still be vulnerable to prolonged periods of cold. If injections continue at current levels and reserves reach only around 63 % in November, Germany would have less leeway to respond to sudden increases in demand.
The possibility of a gas shortage in Germany is thus linked to three main variables with the rate at which storage tanks are filled, availability, and price LNG and the temperatures during December and January. The combined evolution of these factors will determine the level of security of German supply during the coming winter.
Source: Oil Price
Photo: Shutterstock
