After Russia's full-scale invasion of Ukraine, Germany takes over the local Gazprom subsidiary. Today the gas company is called Securing Energy for Europe (Sefe). But instead of securing supplies, it risks it.
The state-owned German gas company Sefe buys gas. What sounds like a given is actually significant news these days. The local gas storage facilities are so empty that there is a risk of a gas shortage, at least in unexpected crisis cases such as the failure of a Norwegian pipeline, extreme cold or a lack of liquid gas deliveries from the USA. In any case, it would be extremely expensive.
Ironically, Sefe's storage facility in Rehden, Lower Saxony - the largest in Germany - ranks third from last in the country when it comes to filling levels. The memory is less than ten percent full. The former subsidiary of the Russian Gazprom group was nationalized on the grounds of ensuring Germany's gas supply.
Economics Minister Katherina Reiche has so far vehemently rejected political intervention in view of the low filling levels; she wants to let the market decide. Even if it does not meet the government storage requirements. In the case of Sefe, even Reiche apparently no longer wanted to see the filling level specifications being ignored - and spoke out. The company is not only state-owned, but also has a history: it belonged to the Russian state-owned company Gazprom.
A good four years ago, after Russia's full-scale invasion of Ukraine, the Federal Network Agency took over the German Gazprom subsidiary in trust. Since then, Gazprom Germania has been called Sefe. Nationalization by the Federal Ministry of Economics followed just months later. This was intended to prevent the impending insolvency at the time. Because this would have endangered the security of supply in Germany.
Gazprom Germania had previously been separated from the Russian state-owned company in a roundabout way. The Federal Prosecutor's Office assumes that the transfer of the German subsidiary to a Moscow company and the subsequent planned liquidation were intended to deliberately sabotage the gas supply in Germany.
The nationalization of Sefe was intended to secure gas supplies. That's what the new name says, it stands for Securing Energy for Europe. Today, however, the name does not keep what it promises, as a look at the filling level in Rehden shows. The company's self-portrayal sounds just as ironic these days. Rehden is one of the largest pore reservoirs in Western Europe. "It has around a fifth of the total storage capacity available in Germany and thus makes a sustainable contribution to the country's security of supply," says Sefe's website.
Overall, German storage facilities are currently around 56 percent full. Most of them would have to be 80 percent full by November 1st, pore storage outside southern Germany like the one in Rehden should be 45 percent full. The gas storage association Ines sounded the alarm, saying that a maximum of 77 percent could be achieved by the beginning of November and that this would not be enough in extreme cold. The storage operators earn their money by making their storage capacities available to gas traders, energy suppliers and industrial customers.
But saving them is no longer worth it. Gas used to be cheaper in summer than in winter, but currently, as a result of the Iran war, gas is so expensive that buying it for resale in winter means a loss-making business.
This does not release retailers from their obligation to meet the fill level specifications. Through its trading division, the Sefe Group is not only active as a storage operator, but also as a gas trader, as energy expert Georg Zachmann from the Bruegel think tank explains to ntv.de. How can it be that the nationalized storage facility remained so empty for so long?
“State-owned companies also operate according to market economy principles”
Despite nationalization, Sefe operates as a trader according to market economy principles, emphasizes Zachmann. “Even a state-owned company must not risk burning hundreds of millions of euros uneconomically to store gas without an explicit order,” says Zachmann. "If, as is currently the case, the 'summer-winter spread' on the market is too low, it does not cover the storage fees and capital costs - storage becomes a loss-making business."
Energy economist Andreas Schröder, on the other hand, not only sees the industry as having a duty to meet its storage requirements, but also sharply criticizes them. The accusation of blackmail cannot be dismissed out of hand, he said in an interview with ntv.de. “The operator Sefe and the capacity holders in Rehden can be accused of speculating on government intervention in order to fill the storage facility,” says the chief analyst for the gas and LNG markets at the analysis house Independent Commodity Intelligence Services.
However, if the state were to officially intervene by allowing gas to be purchased itself, prices would likely rise even further. So far, Minister Reiche has rejected government purchasing like in 2022 and is instead relying on incentives for dealers to keep additional gas available in return for compensation. If more gas is needed in winter than is stored, the federal government also relies on liquefied natural gas (LNG), which can be purchased at short notice. Due to the LNG infrastructure that Germany has built up in recent years as a consequence of Russia's war of aggression against Ukraine, the gas storage facilities have become less important.
However, the planning of a strategic reserve shows that the state could not rely solely on LNG and pipeline deliveries in an unforeseen crisis. However, its construction is not planned until next year.
The consequences for the gas industry would be simpler than a strategic reserve if it does not adhere to government filling level requirements. Sanctions are not provided for in this case. In Italy, however, it does, as Andreas Goldthau, director of the Willy Brandt School of Public Policy at the University of Erfurt, explains. In the Netherlands, storage is subsidized if the price difference between summer and winter is not sufficient. “In other countries we see functioning prevention models.”
