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Europe's Shift from Russian Gas to Pricey LNG

Europe's Shift from Russian Gas to Pricey LNG

Europe's switch from Russian pipeline…

Germany to Ditch Controversial Tax on Gas Transit in 2025

Germany will abolish from 2025 a controversial levy on natural gas storage which countries in central Europe have had to pay to get gas piped through Germany.   

Countries in central Europe, including Austria, the Czech Republic, Hungary, and Slovakia are being charged by Germany with the so-called gas storage levy on exports of natural gas from Germany. The tax has raised tensions between the central European countries and Germany, with Germany’s neighbors saying that the tax makes their gas imports from Germany more expensive and their efforts to reduce Russian gas imports futile.

Berlin introduced in October 2022 the so-called ‘gas storage levy’—a national export duty on natural gas, which has since increased the cost of exporting gas from Germany to Central and Eastern Europe.

Now the levy on gas exports will be scrapped from January 2025, Sven Giegold, Germany’s state secretary for economic affairs and climate action, said on Thursday.

Still, an increase in the tax will go as planned from July 2024, Giegold added, as quoted by Bloomberg.

For traders within Germany, the gas storage levy will remain beyond 2025, the official noted.

“It was never our intention to hamper the diversification away from Russian gas,” Giegold said, commenting on the announcement of scrapping the gas levy for cross-border transit.

Austria welcomed the German decision, with Climate and Energy Minister Leonore Gewessler saying that “the end of the gas storage levy for imports of non-Russian natural gas to Austria, which Germany announced today, is an important success.”

Austria has pressured officials during numerous meetings for an end to the levy, pointing out that this measure was contrary to European law, Gewessler said on X.

The scrapping of the German levy also removes another obstacle to the EU and Austria, as there are now no excuses left for increasing gas dependence on Russia, Gewessler added.

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“Only independence gives us energy security,” the minister concluded.   

By Charles Kennedy for Oilprice.com

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