Germany to Push for End of Gas Storage Targets After 2027 Expiry

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(Bloomberg) — German officials are preparing to push for the European Union to discontinue its gas storage targets when they expire in 2027, and instead implement an alternative strategic reserve system that would be managed by individual member states.

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The country’s economy ministry has held a series of meetings this month with business and regulatory representatives as concerns over low inventories mount, according to people familiar with the discussions. While the current stockpiling rules for gas won’t expire until 2027, Germany wants an EU decision on what happens after that by this summer, two of the people said.

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The targets — introduced during the 2022 energy crisis — are meant to ensure the region has enough gas to get through winter. Europe has, however, struggled to get its gas inventories to the required levels, and is likely to face similar challenges in 2026. Cold spells have drained reserves to unusually low levels, and an unprofitable gap between summer and winter gas prices has left little incentive for traders to store gas during the warmer months.

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One impact of the targets is that they’ve in the past signaled to markets that some governments such as Germany’s may intervene in order to meet them, driving up summer prices and making it even less attractive for the market to build up stockpiles.

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Asked about the issue on the sidelines of a conference in Berlin this week, the president of the Federal Network Agency, Klaus Müller, said “the storage level targets, which proved effective during the crisis, are now sending counterproductive market signals.”

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“Considering a strategic gas reserve is a very worthwhile discussion,” he said.

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At the moment, the EU requires gas storages to be at least 80% full by winter, a rule that is already more flexible than earlier iterations. Renewing such targets beyond 2027 would require the commission, the bloc’s executive branch, to come forward with a proposal and then for a qualified majority of member states and parliament to support it.

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Removing the EU targets is seen as a prerequisite to moving ahead with the idea of building a strategic buffer, the people said. Such a facility — currently used in Austria — would be a much smaller version of America’s emergency oil reserve. It would hold defined gas volumes for emergencies, which would only be released under clearly defined conditions, and thereby avoid distorting the price structure in the gas market.

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The size and structure would still have to be discussed, said the people, who asked not to be named as the talks are private.

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A spokesperson for the economy ministry said it’s in regular contact with the industry and other stakeholders and is evaluating its position. The European Commission declined to comment.

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A study commissioned by the economy ministry and published in October said that the EU’s filling-level requirements have helped secure supply during the crisis, but are now leading “to noticeable market distortions.” It called for a permanent abolition of the targets as well as the introduction of a strategic reserve.

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For this winter, Müller from the Federal Network Agency said he’s “currently relaxed regarding gas supply levels.” There are no plans for Trading Hub Europe GmbH — Germany’s gas market manager — to step in to help with fuel stockpiling this year, he said. 

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Last year, speculation that THE would provide support sparked significant price swings and made it unprofitable to refill storages as traders bet it would be willing to buy gas at higher prices. An intervention by THE would’ve meant additional costs for gas customers.

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“Even in cold winters, gas traders and suppliers are responsible,” Müller said. “We are optimistic that they will live up to their responsibility.”

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—With assistance from Elena Mazneva, Priscila Azevedo Rocha and John Ainger.

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