Germany's INES warns gas demand curtailments still required ahead of winter

An extremely cold winter could still pose challenges for German gas supply, with demand curtailments necessary despite current healthy storage levels, German gas association the Initiative Energien Speichern, or INES, said July 10.

Stores could be completely emptied by the beginning of February 2025 in the event of a harsh winter, the association said in its July gas update.

"As in the last two winters, extremely cold temperatures could pose challenges for our gas supply," Sebastian Heinermann, INES' madaging Director said. "We are not out of the woods yet. The security of gas supply that we were used to before the energy crisis has not yet been fully restored in Germany."

Consumption savings remained a "relevant issue" for the coming winter, while in the event of extreme cold, consumption levels associated with previous savings may not be fully covered, the association warned.

INES uses the 2016 EU weather year for what it regards as "normal temperatures", basing warm temperatures on the European summer of 2020, and cold temperatures corresponding to the European winter of 2010.

Germany's storage rules -- established after Russia's invasion of Ukraine in 2022 – imposed storage mandates on market participants using its sites. It requires storage sites to be 85% full by Oct. 1, 2024, and 95% full by Nov. 1. Gas storage sites must also be at least 40% full by Feb. 1, 2025.

At normal temperatures, the association estimates gas consumption in October 2024 would double compared with the previous month, while consumption in November could increase to such an extent that storage may have to be withdrawn, INES said.

If temperatures remain between normal and warm, storage facilities could be emptied to a filling level of 35%-69% by the end of winter, in April 2025, while in both scenarios, February's legal limit could be met, it said.

It comes as gas prices in Europe continue to trend lower, largely on demand curtailment efforts, robust gas storage sites and higher deliveries of LNG.

Platts, part of S&P Global Commodity Insights, assessed the Dutch TTF month-ahead price at Eur30.745/MWh on July 10, down 1.62% on the day.

In February 2024, a warmer winter in Europe saw gas storage withdrawals limited through winter, with German gas storage recorded at around 74% full by Feb. 1. German sites were recorded at 84% full as of the July 9 gas day, according to data from Gas Infrastructure Europe.

Germany's strong reliance on Russian pipeline imports prior to 2022 meant its gas balance required a seismic shift to align with the EU's REPowerEU initiative, which targets a complete phase out of Russian fossil fuel imports by 2027.

The country has since turned to LNG as a diversified energy source, with the German government leasing a total of five floating storage and regasification units at Willemshaven, Brunsbuttel, Stade and Lubmin.

A new terminal is expected at Mukran, in the German Baltic Sea, with the Neptune FSRU arriving at the site on July 3, and commercial operations at the site expected to commence imminently, operator Deutsche ReGas said.

The terminal will have a total regasification capacity of up to 13.5 Bcm/year and will be able to cover up to 15% of Germany's total gas demand, it said.