Germany Sees Natural Gas Prices Remaining High For Years

Germany expects natural gas prices to remain high until at least 2027, the government said on Wednesday in a report on the measures to mitigate high energy costs for households.

Since the beginning of this year, when the so-called price brake was introduced, the federal government has paid a total of $19.6 billion (18 billion euros) to help vulnerable customers. The energy price relief is working, the government said, adding that the measures have helped to lower energy prices for consumers and curb inflation.

Natural gas prices could rise in the coming months and could remain at elevated levels for several years, the government’s analysis showed.

Last week, INES, the group of German gas storage operators, said in its August gas update that Germany would 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.

“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.

Also last 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.

By Tsvetana Paraskova for Oilprice.com

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