Germany to Wait Until Summer End to See If Gas Support Is Needed

An oil tanker truck departs an oil terminal in the Port of Hamburg in Hamburg, Germany. Photo by Krisztian Bocsi /Bloomberg

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(Bloomberg) — Germany’s gas market manager will only step in to support storage injections at the end of summer if needed, but is optimistic that won’t be necessary after a drop in energy prices has revived stockpiling.

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Trading Hub Europe GmbH, which has been working on a potential subsidy mechanism to help the nation refill its depleted storage sites, has improved the proposal since its announcement was met with criticism earlier this year, according to Chief Executive Officer Sebastian Kemper. Yet he currently sees no need to use it.

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Soaring prices and depleted storage sites prompted the European Union to propose lowering mandatory filling targets across the region. Although not fully signed off yet, it has already helped to bring down prices and normalize the spread between Europe’s summer and winter gas contracts. Sites in France and Italy are filling up, but some in Germany are still lagging.

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The country recently lowered its own national storage targets in an attempt to ease pressure on the market. The economy ministry also said state-sponsored filling of storage sites via THE — which is responsible for the smooth functioning of Germany’s gas market — “is not appropriate” and “would unnecessarily increase costs for gas consumers.”

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“At the moment we have good spread, good gas prices,” Kemper said. “But if this changes and no one is booking any capacities at the storages, then the ministry will perhaps change its mind and the product will be used.”

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A spokesperson for the ministry reiterated on Wednesday that “intervention by THE is unnecessary.”

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Still, Germany’s largest gas storage site in the northwestern municipality of Rehden remains nearly empty after a cold winter led to hefty withdrawals. While injections have proceeded at other storage facilities, the site provides an important buffer for the country’s energy security. It needs to be at least 45% full by Nov. 1.

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“Of course our specialists have a timeline for when and if we need to intervene. I cannot communicate it. All I can say is that it is more or less in the end of the summer,” he said when asked about the timeline for a possible intervention at the Rehden site.

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“We’ll see the auctions, we will see what happens but we are really positive at the moment and we think that the market will fill up Rehden as well,” Kemper said. Storage capacity at the facility will be auctioned on Thursday.

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—With assistance from Eva Brendel.

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