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Now that the winter season ended, Germany has started the process of filling its natural gas storage sites via auctions. As prices have declined and are in contango, Europe’s biggest economy has managed to fill just over half of its gas storage capacity so far.
Germany’s gas storage capacity was nearly 53% full as of June 9, according to data from Gas Infrastructure Europe.
EU member states are now required to reach a minimum 80% gas storage level by November 1 to protect against potential interruptions to supply. In 2023, the target will be raised to 90% full gas storage by November 1.
With day-ahead prices now at a huge discount to prices for the winter months, Germany is coping well with procuring gas so far, contrary to earlier doubts from the industry, Bloomberg reports.
Germany depends on Russian gas—mostly via the Nord Stream pipeline—for nearly 40 percent of its supply. It looks to reduce dependence on Russian supply but has acknowledged it would need a few years to become completely independent. The German industry in the biggest European economy has warned that a halt in Russian gas supply now would be “catastrophic.”
German Economy Minister Robert Habeck said last month that Germany would be able to withstand a halt of Russian natural gas supplies as long as it manages to fill up its gas storage.
Filling up storage is going well so far, as natural gas prices in Europe and in Germany have dropped amid an influx of LNG supply and mild weather. Concerns about natural gas shortages have abated since the end of the winter heating season in Europe, but the EU and Germany still have a lot of work to do to fill gas sites by the autumn.
Right now, all the favorable factors for faster inventory building are in place.
“The current summer-winter spreads are a strong incentive for gas storage,” Sebastian Bleschke, head of the association of German storage facility operators, INES, told Bloomberg, adding that Germany is currently stockpiling an “above-average amount” of gas.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.