Germany Discusses Creating State-Owned Strategic Gas Storage

A gas storage site in Germany. Photographer: Krisztian Bocsi/Bloomberg Photo by Krisztian Bocsi /Bloomberg

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(Bloomberg) — Germany is examining whether it should create a strategic store of gas, a smaller version of America’s emergency oil reserve, according to people familiar with the plans.

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The economy ministry has commissioned experts to look into the feasibility of state-owned gas storage, said the people who couldn’t be named as the matter is confidential. Most gas sites are filled by private companies which buy the fuel in summer and pay to store it until winter when they hope to sell it back to the market for a profit. 

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A government spokesperson said by phone that the ministry is tendering for a broad study of the gas market and that a strategic storage is just one aspect within that. 

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Germany has some of the largest storage sites in Europe and is currently struggling to restock, with caverns unusually empty due to poor economics prompting a recent move to relax filling requirements. The lack of activity has spurred operators like Uniper SE to threaten to close sites that aren’t making money. Germany needs gas for swaths of its industry that drive its economy, which is why officials are considering state-owned reserves.

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The US Strategic Petroleum Reserve is the world’s largest supply of emergency crude oil, making it a significant deterrent to oil import cutoffs and a key tool in foreign policy, according to the Department of Energy website.

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Some EU members, including Italy and Austria, already have state-controlled strategic gas reserves that aren’t freely available for the rest of the market to use. State reserves cover about 11% of the bloc’s total storage capacity, on average, according to the European Network of Transmission System Operators for Gas.

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The issue is particularly pertinent for the south of the country where gas demand from industry is high. While the government recently lowered gas storage targets to ease price pressure on stockpiling, it kept higher filling requirements for four sites near the Swiss and Austrian borders.

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One site that’s been briefly discussed as a strategic resource for Germany but now seen as less suitable is Rehden, one of the biggest in Europe, according to one of the people. Other options like cavern storage are easier to fill and more economic, one of the people said.

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Gas that’s kept on a short-term basis in the nation’s terminals for importing liquefied natural gas could also be used as strategic reserve, the people said. Germany built out capacity during the energy crisis to replace Russian pipeline gas, and currently has three terminals operating.

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