Germany At Risk Of Natural Gas Shortages For Years To Come

• INES believes Germany will be at risk of natural gas shortages for years to come unless it takes measures to add LNG terminals.
• The group believes Germany also needs more storage capacity or to increase its pipeline connections to boost energy security.
• While Germany has so far avoided the significant price spikes seen last year, structurally lower demand remains years away.

Germany will continue to be at risk of natural gas shortages until the 2026/2027 winter season unless it takes measures to add LNG terminals, additional gas storage capacity, or pipelines, INES, the group of German gas storage operators, said in its August gas update on Thursday.

“Without further infrastructure measures, the risk of a gas shortage in cold temperatures still exists and will probably continue to accompany us until the 2026/27 winter,” INES’s head Sebastian Bleschke said in a statement.

The group expects structurally lower gas consumption to manifest itself no earlier than 2026/27, he added.

Germany should consider not only additional LNG terminals but also additional gas storage capacities or pipeline connections to boost its supply security. Germany will certainly need LNG terminals for the coming winter and the following winter, Bleschke said.

Earlier this week, one of Germany’s top utility firms, E.ON, warned that Europe could still face price spikes this winter if a sudden shortage of supply coincides with colder-than-normal temperatures, despite significantly calmer energy markets and much lower wholesale natural gas prices.

“We have to be clear that the structural change due to the Russian war in Ukraine and the drop out of Russian gas in the supply of Europe is going to stay and therefore the crisis is not over,” CEO Leonhard Birnbaum told Bloomberg Television in an interview.

E.ON is more optimistic about this year and the coming winter compared to last year, and reported adjusted core earnings up by 40% in the first half of 2023 compared to the first half of 2022, which was “adversely impacted by the energy-industry environment.”

“After a long period of crisis, we sense that the headwinds for our business are diminishing. We see our markets increasingly recover,” Birnbaum said, stressing the importance of advancing the energy transition.  

By Tsvetana Paraskova for Oilprice.com

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