Berlin The Federal Ministry of Economics (BMWK) buys liquefied natural gas (LNG) for 1.5 billion euros in order to fill the natural gas storage facilities and thus ease the supply situation. The first contracts were already signed on Tuesday. According to a ministry spokesman, Trading Hub Europe GmbH (THE) will be commissioned with the procurement.
The federal government has provided THE financial means to procure the LNG and store it in German gas storage facilities. THE has not yet commented on where the gas will come from. “We are currently unable to provide any information about the exact details of the contract and the volume. THE procures the LNG on a non-discriminatory basis on the basis of available offers and starts procurement immediately,” writes THE.
The tasks of the company are laid down in the Energy Industry Act (EnWG). THE does not make a profit, it is financed by the network charges paid by the gas consumers. The shareholders of THE are companies such as Open Grid Europe (OGE), Gasunie Germany and Thyssengas.
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The Federal Ministry of Finance has already approved the procurement of LNG on behalf of the BMWK. A letter from Florian Toncar, Parliamentary State Secretary in the Federal Ministry of Finance, to the President of the Bundestag Bärbel Bas dated March 1 states that, at the request of the Federal Ministry of Economics, his house had given its approval for unscheduled expenditure of up to 1.5 billion euros. From this, all costs of short-term procurement, storage and transport of additional gas reserves should be financed.
The Bundestag was not informed. Despite the amount of the unscheduled expenditure, an exception to the obligation to inform the Budget Committee of the Bundestag is “necessary for compelling reasons,” writes the State Secretary.
The reason given in the letter is that the first gas delivery should have taken place on March 1st and that the payments should have been made “very promptly”. The news portal “The Pioneer” first reported on Toncar’s letter.
Industry representatives welcomed the measure. It is likely to help calm the markets. “That’s the right signal,” said one manager.
New price records on the gas market
Gas prices hit new highs in short-term trading on Wednesday. The trigger for this is the concern that gas deliveries from Russia could fail. However, there are no concrete signs of this at the moment.
For example, the transit of Russian natural gas through Ukraine is running at full speed despite the Russian attack on the country. This is confirmed by current figures from the Ukrainian gas transmission system operator GTSOU.
Habeck presented a draft law to create a national gas reserve on Monday. However, the planned regulation does not focus on gas procurement by the federal government, as Habeck has now implemented at short notice. Rather, the regulation shifts the obligation to systematically fill the gas storage facilities to the players in the gas market. At the heart of the regulation is a three-stage plan.
Trading Hub Europe GmbH also plays an important role in the implementation of the law. In stage one of the plan, it is intended to ensure that a filling level of ten to 30 percent is reached well before the start of the heating period. To this end, the company is to tender long-term gas quantities for storage that must be procured and stored by a certain point in time.
Stage two of the law stipulates that storage users – such as gas importers or gas traders – are obliged to fill the storage facility to 80 percent by the beginning of October, and 90 percent by the beginning of December.
So far, storage has only followed the laws of the market
If the filling levels were not reached on the way to this goal, THE would procure gas using a special tender. If that does not lead to the desired fill levels either, level three of the new concept would come into play as a last resort: THE would buy the required gas directly itself.
So far, the storage of natural gas has followed the laws of the market; there is no strategic storage like there is with oil. This is one of the reasons why the natural gas storage tanks were low at the beginning of the current heating season.
Because in the months before, i.e. in the spring and summer of last year, natural gas prices were high due to the rapid economic recovery after the first corona crisis. Many traders have been reluctant to buy and store gas. Other factors came later. In particular, the Russians only supplied the quantities that were contractually agreed, but offered very little gas on the spot market.
Germany has by far the largest storage capacities for natural gas in Central and Western Europe. Mathematically, the capacities are sufficient to supply Germany with gas for two to three average cold winter months. However, this presupposes that the storage tanks are well filled at the beginning of the heating season.
More: Robert Habeck is promoting LNG deliveries in the USA.