BERLIN: Germany's economy minister is planning to lean on market incentives to persuade traders to hold back more natural gas this winter rather than have the state buy gas directly, a government source told Reuters, as the country heads into the cold months with its lowest storage levels in 15 years.
Economy Minister Katherina Reiche's approach centers on expanding a planned autumn tender for so-called Long Term Options, or LTOs, the source said. The size of the increase has not yet been determined.
LTOs are contracts that allow Trading Hub Europe, Germany's nationwide gas market coordinator, to secure gas deliveries from traders that can be tapped later if needed, rather than the government purchasing and stockpiling gas on its own.
The government has also reached an understanding with two state-owned energy companies, Uniper and SEFE, that they will make fuller use of their storage capacity, according to the source. Both firms were nationalized by Berlin during the 2022 energy crisis after Russia curtailed gas supplies to Europe.
Politico reported that Reiche's ministry aims to settle on a course of action by Sept. 21.
The push comes as Germany's gas storage sites stood at around 53% full in early September, the lowest level for that time of year since records began 15 years ago, according to the storage association INES. That compares with roughly 71% a year earlier.
INES warned last week that an unusually cold winter could produce supply shortfalls as early as January, with daily shortages on some days potentially exceeding 25% of demand.
Germany's gas storage law requires facilities to reach certain fill levels ahead of winter, including a roughly 70% target by Nov. 1, a rule put in place after the 2022 energy crisis when Russia slashed pipeline deliveries to Europe. INES has said storage could technically still reach about 77% by Nov. 1 if injections accelerate sharply, but that even that level would not guarantee supply in an extreme cold snap.
INES has attributed the slow pace of refilling this year largely to unfavorable market economics: the price spread between cheaper summer gas and costlier winter gas has narrowed and, after fees and levies, has at times turned negative, discouraging storage operators from injecting gas. The association has proposed eliminating certain storage charges and offering subsidized government loans to improve the incentive to stockpile.
Bloomberg has reported that German officials began discussing how Uniper and SEFE might support stockpiling efforts after an initial Middle East cease-fire collapsed and gas prices climbed again. Germany must reduce its stakes in both companies to 25% plus one share by 2028 under terms tied to their 2022 bailouts, which cost Berlin roughly 20 billion euros combined.
The European Union as a whole has also lagged its usual seasonal pace, with the bloc's storage around 67% full in early September compared with Germany's 53-54%, according to industry data. The EU's energy commissioner has urged member states to accelerate refilling ahead of winter.
Germany relied heavily on Russian pipeline gas before 2022 but has since built out liquefied natural gas import capacity, including floating LNG terminals, and increased reliance on Norwegian pipeline gas to diversify supply.
