Despite the low storage capacity, the German Economy Ministry said that no gas shortage is expected this winter.
“According to the currently available data, no gas shortage is expected this winter“, the ministry document says. However, future government intervention is not ruled out. The ministry takes seriously the fact that gas storage capacity in Germany is significantly lower than in previous years. “At the same time, security of supply cannot be assessed solely on the basis of storage capacity“, the Economy Ministry explained.
The ministry noted that gas is supplied, in particular, via pipelines from Norway, via liquefied natural gas (LNG) import terminals and from neighboring European countries. “At the same time, the following is also true: lower storage capacity reduces the safety margin in case of emergencies“, the ministry noted. This becomes especially relevant when several factors combine, such as “prolonged cold weather, damage to critical import infrastructure or additional disruptions to the international LNG market“, the ministry explained.
The Ministry of Economy estimates that 60-70% of the storage capacity until the beginning of winter, combined with import capacity, will be sufficient to meet average winter demand. Gas prices rose significantly this summer due to the conflict over Iran and the blockade of the Strait of Hormuz, which led traders to buy less for the winter sales. “A tense market situation with high prices does not necessarily mean a supply crisis“, the ministry concluded.
The Ministry of Economy believes that the main responsibility lies with the private sector. "Preparing for winter is generally the responsibility of gas companies and traders," the ministry said. "State purchases of gas could create additional demand, push up prices and crowd out private investment in filling storage. There is also a risk that market participants will in future rely on the state to intervene whenever reserves are low," the German economy ministry concluded.
The ministry explained that the German government was "preparing the necessary options for action so that they can be implemented quickly and effectively if the situation worsens." The state of storage, imports, the availability of liquefied natural gas, infrastructure, demand and the situation in neighboring countries are being monitored. German gas storage facilities are only 50 percent full, the lowest level for this time of year in at least eight years.