Gas storage association warns of bottlenecks in winter

The Iran war and unfavorable price developments on the gas market are impacting the energy supply in Germany. The gas storage facilities are currently only about half full. The Federal Ministry of Economics does not want to do anything - despite filling level specifications. Traders could take advantage of this.

The gas storage association Ines warns of bottlenecks in natural gas supply in the coming winter due to historically low filling levels. The Energy Storage Initiative (Ines) said that German storage facilities were only around 53 percent full at the beginning of September. This is the lowest level at this point since records began 15 years ago. A year ago the filling level was around 71 percent.

According to the association's scenarios, a filling level of around 77 percent can technically be achieved by November 1st. However, the filling speed would have to increase significantly for this to happen. More gas would have to be stored in the remaining two months than in the past three months combined. According to the association, a filling level of 77 percent would be sufficient to guarantee supply at normal winter temperatures. “In extremely cold temperatures, however, a filling level of around 77 percent is not enough,” said Ines managing director Sebastian Heinermann. Then there could be a shortfall in funding in January.

The low filling of gas storage facilities compared to previous years has been an issue for months. The association cites the economic conditions affected by the Iran war as the reason for the slow storage period. Increased gas prices following the closure of the Strait of Hormuz and a partially negative so-called summer-winter spread, i.e. a market situation in which gas is more expensive in the summer than in the following winter months, made storage unattractive for market players. Traders typically buy gas in the cheap summer and sell it in the more expensive winter. But if the spread is negative, they make losses.

Ministry of Economic Affairs rejects government intervention

Ines is therefore calling for a package of measures that, among other things, provides for a reduction in storage costs. The Federal Ministry of Economics has so far seen no reason to doubt the security of supply. The ministry points to new terminals for liquefied natural gas and pipeline deliveries from Norway and rejects government intervention.

This is still an option, particularly because of the gas storage requirements. The government guidelines state that most storage facilities must be at least 80 percent full by November 1st, which is already hardly possible in many cases. If the goals are not achieved, the state can order the filling - one fear is that gas sellers will speculate on this, because the state would then probably buy at any price.

Ines is the interest group of German natural gas and hydrogen storage operators. According to its own information, its 17 members represent over 90 percent of Germany's gas storage capacities and have an economic interest in high utilization of the facilities.