Reserve-winter period – Newspaper Kommersant No. 207 (7408) dated 11/09/2022

Despite the complete cessation of pipeline gas supplies from the Russian Federation and the skepticism that existed on the market, Germany was able to fill its storage facilities by 99.54%, France – by 99.9%, Italy – by 95.5%. This was helped by warm weather and, in the case of Germany, a serious reduction in consumption in recent months. According to analysts, with such a level of reserves, the country will be able to calmly go through the current winter season.

The level of gas reserves in underground storage facilities in Germany as of November 8 reached 99.54% (about 22.6 billion cubic meters), reported Federal network agency of Germany. The country’s largest storage facility, Rehden, is 93.75% full. In the other two countries with the highest gas consumption in the EU – France and Italy – stocks are also approaching the maximum possible. In France, UGS facilities are 99.9% full (12.3 billion cubic meters), in Italy — 95.5% (17 billion cubic meters).

Germany remains the largest consumer of gas in Europe, and it has suffered the most from the suspension of Russian gas supplies via Nord Stream.

To meet demand, the country’s major utilities were forced to buy replacement volumes on the market at a much higher price. In addition, Germany does not have its own LNG import infrastructure. It buys gas through long-term capacity orders at terminals in other countries. In 2023, according to Bloomberg, Germany will spend €83.3 billion to subsidize gas and electricity prices.

Prior to the outbreak of hostilities in Ukraine, Germany’s largest UGS facilities belonged to Gazprom-controlled Gazprom Germania GmbH. In April, the German regulator BNetzA took control its German assets, and the company itself was later renamed SEFE. Gazprom March 31 ceased participation in Gazprom Germania GmbH, and the Russian government imposed sanctions on these assets.

There was skepticism on the market about Germany’s ability to fill even 80-90% of storage by early November, as Russian gas supplies began to drop significantly in June, and almost stopped at the end of August. However, gas consumption in the country during the summer and early autumn decreased by more than 20% yoy (see chart), mainly due to sharply increased gas prices.

Despite the full filling of storage facilities, the German regulator notes that the situation remains tense and further deterioration cannot be ruled out.

The regulator is urging consumers to reduce their consumption this winter by at least 20%, which will be difficult, since last heating season consumption has already been declining rapidly since December. The warm weather that prevailed in Europe in October and early November, as well as consistently high volumes of LNG supplies, helps delay the start of the withdrawal season from German UGSFs. According to the regulator, the temperature this week is 4 °C higher than in previous years.

The start of the withdrawal season from UGS facilities this year will be the latest in the history of observations, it follows from the data Gas Infrastructure Europe. Injection of gas into UGS facilities so far exceeds withdrawals made on certain days by some countries, and the average reserves in the EU are 95.3% (about 98 billion cubic meters).

Many European experts back in July-August did not believe that German UGS facilities would be filled by more than 90%, recalls Sergei Kondratiev from the Institute of Energy and Finance. According to him, the accumulated reserves in UGS facilities make it possible to meet 30% of the forecast demand in Germany in the 2022/23 gas year (starts in October). “Thus, with a high probability, Germany will be able to relatively calmly go through this winter season, even with noticeable fluctuations in LNG supplies,” he said. Unless there are weather anomalies like unusual frosts or a long period of calm weather (will reduce the generation of renewable energy). At the same time, the issue of preparing for the next winter season of 2023/24 still remains, the expert states.

Tatyana Dyatel