Germany could be facing an empty national gas reserve by mid-December if it continues to export the resource at current levels, says the country’s gas regulatory body.
In a report by Bundesnetzagentur, Germany’s Federal Network Agency, only by reducing gas exports and keeping import levels from Nord Stream 1 pipeline can the country achieve its set gas storage level goals.
On June 14, Gazprom, Russia’s state-owned gas producer, reduced its gas deliveries 40% to Germany through the pipeline. This led to exports dropping to 52 GW from last month’s 86 GW.
The regulatory body studied a matrix of scenarios and its projected effect on the country’s gas reserves. The factors include a reduction in exports commensurate to the Nord Stream 1 pipeline restrictions, a 20% reduction in domestic consumption starting in July, and activating the country’s LNG terminals.
The Nord Stream 1 pipeline is scheduled to shut off for two-week maintenance between July 11 to 25, during which the country expects no gas imports to flow. Assuming that the pipeline remains closed following threats from Russia to completely halt delivering gas supplies to Europe, Germany would reach a gas shortage level by mid-December, projecting a deficit by winter worth 10% of annual consumption.
If the domestic consumption is reduced and the LNG terminals are activated, the gas reserve lifeline is only extended by a month. If the Nord Stream 1 pipeline goes back online after the scheduled maintenance–even with the 40% reduction–it just staves off the gas shortage for a few more weeks.
These are the possible scenarios should exports be kept at a level prior to Gazprom’s cutdown of Nord Stream 1 pipeline exports.
However, if the country reduces exports–following the 52 GW capacity–the gas reserve won’t probably reach the shortage levels, even if there’s no reduction in domestic consumption and LNG terminals aren’t activated. However, the gas reserve would be at a low level by the end of the winter.
But only with a proposed reduction in gas exports and keeping the Nord Stream 1 pipeline open at its reduced capacity can the country possibly achieve its gas level targets.
“The domestic reduction in consumption is crucial to ensure this of their own security of supply and the necessary supply of neighboring countries,” said the federal agency.
Earlier this month, Berlin was said to be planning to restart its coal-fired power plants to conserve its natural gas supplies.
Information for this briefing was found via Bundesnetzagentur. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.