Germany gas storage auctions still on hold amid energy concerns
Germany's gas storage situation remained unresolved as state-subsidized gas auctions, intended to replenish the nation's underground storage caverns, were not planned despite previous expectations. The announcement came during a stakeholder meeting at a trade fair, organized by Germany's gas market manager, Trading Hub Europe (THE).
According to Reuters, this development poses a significant challenge for Europe's largest economy as it grapples with energy supply concerns for the upcoming winter while trying to conserve state funds ahead of a general election.
THE, which oversees the gas market, has been in discussions about incentivizing new storage injections for the summer. However, their state supervisors have yet to specify and decide on these incentives. The urgency of this matter is underscored by the fact that European next-month gas prices are hovering near two-year highs due to cold weather and intense global competition for supply.
A shift in seasonal price trends has reduced the appeal of refilling gas storage during the summer, leading to increased expectations that THE will need to offer incentives for gas purchases to achieve a 90% filling target by November. This target is mandated by national and European laws to ensure energy supply security.
Currently, Germany holds the highest gas storage capacity in Europe, but its facilities are only 48% full. This represents a considerable decline from the 72% level recorded at the same time last year, as per Gas Infrastructure Europe (GIE) data.
THE's managing director, Torsten Frank, acknowledged the uncertainty surrounding the type of action and its timing. In an interview, he discussed the possibility of abolishing the filling requirements altogether, allowing market forces to dictate the process.
Frank highlighted that any decision would require a careful evaluation of the pros and cons for supply security, emphasizing that it ultimately rests on a political decision.
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