Germany has awarded contracts worth almost 245 million euros to secure additional gas supplies in the winter. The amount includes around 107 million euros for special tenders designed to guarantee supplies in February and March 2027, as well as approximately 137 million euros under regular procedures to cover possible congestion on the gas network.
The contracts were concluded by Trading Hub Europe (THE) and are designed as a backup mechanism. They should encourage traders to hold more gas in underground storage and, if necessary, store additional quantities. The decision comes against the background of significantly lower stocks compared to last year. As of October 21, the storage facilities were 61.1% full, compared to 75.4% a year earlier.
Warning of a cold winter
In September, the German gas storage operators' association INES warned that in a very cold winter, stocks could run out by the end of January or the beginning of February 2027. The assessment was made under a scenario similar to the extremely cold winter of 2010.
According to INES calculations, even reaching 77% fullness by November 1 would not guarantee a smooth transition through such a season. On individual days, the shortage could exceed 25%, meaning that there would not be enough gas for all consumers. At normal temperatures, stocks should last until the end of the heating season.
Dependence on imports and market conditions
The warning is related to the slow filling of storage facilities and the limited economic incentives for traders to buy gas during the summer months. In August, the gas transmission network operators reported that as of August 18, storage facilities were only 50.06% full and that the legal target of 71% by November 1 was practically impossible to achieve at the current rate of injection.
“Low imports of liquefied natural gas, late or prolonged cold spells and infrastructure failures could threaten gas supplies in the coming winter. Liquefied gas alone is not enough“, said Matthias Jen, CEO of FNB Gas. According to operators, LNG terminals in Germany can cover just under 10% of total demand on a typical winter day.
The German economy ministry maintains a more moderate assessment. According to the ministry, security of supply depends not only on the level in storage, but also on pipeline imports, LNG terminals and demand. The ministry does not expect a physical shortage when combining these sources, but acknowledges the risk of higher and more unstable prices.
THE's new contracts provide additional protection precisely for the riskiest part of the season. They do not automatically mean that all quantities have already been purchased and pumped, but create a financial incentive to keep gas available until February and March, when consumption is usually highest.
Sources: live.euronext.com, handelsblatt.com