European governments are scrambling to fill underground storage with gas supplies to provide households with enough fuel to keep homes warm during winter.
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Germany’s natural gas storage facilities surpassed a fill level of more than 75% this month, two weeks ahead of schedule, as Europe’s largest economy scrambles to prepare for the coming winter.
The latest data compiled by industry group Gas Infrastructure Europe shows Germany’s gas storage facilities at slightly over 77% full.
Chancellor Olaf Scholz’s government initially planned for gas storage levels to reach 75% by Sept. 1. The next federally mandated targets are 85% by Oct. 1 and 95% by Nov. 1.
European governments are racing to fill underground storage facilities with natural gas supplies in order to have enough fuel to keep homes warm during the coming months.
Russia has drastically reduced natural gas supplies to Europe in recent weeks, with flows via the Nord Stream 1 pipeline to Germany currently operating at just 20% of agreed upon volume.
Moscow blames faulty and delayed equipment. Germany, however, considers the supply cut to be a political maneuver designed to sow European uncertainty and boost energy prices amid the Kremlin’s onslaught against Ukraine.
“Germany developed a business model that was largely based on dependence on cheap Russian gas and thus also a dependence on a president who disregards international law [and] to whom liberal democracy and its values are declared enemies,” Economy Minister Robert Habeck said at a press conference on Monday, according to a translation. “This model has failed, and it is not coming back.”
His comments came as Germany’s gas market operator, Trading Hub Europe, announced that households nationwide would have to pay almost 500 euros ($507.3) more per year for gas.
The new tax is designed to help utilities cover the cost of replacing Russian supplies, though Germany’s government has faced calls to provide further relief for the public.
“All measures, and this is undisputed, have a price,” Habeck said. “All measures have consequences and some of them are also impositions, but they lead to us being less susceptible to blackmail and us being able to decide on our energy supply independently of Russia.”
Europe’s race to save enough gas to get through the colder months comes at a time of skyrocketing prices. The surge in energy costs is driving up household bills, pushing inflation to its highest level in decades and squeezing people’s spending power.
Germany, until recently, bought more than half of its gas from Russia. And the government is now battling to shore up winter gas supplies amid fears Moscow could soon turn off the taps completely.
“I think the chances are quite good that Germany will get to 90% storage capacity by the beginning of winter, but that still is not sufficient to really avoid a gas shortage,” Marcel Fratzscher, president of the German Institute for Economic Research (DIW), told CNBC’s “Squawk Box Europe” on Tuesday.
“Even if Germany gets through the winter, the problem might come in spring next year, so the uncertainty is there and companies are concerned,” Fratzscher said.
“The uncertainty is poison for the economy. Companies investing less, consumers consuming less — and so the result is that we are seeing a massive slowdown of the German economy,” he added.
RWE Chief Financial Officer Michael Muller told CNBC’s Joumanna Bercetche on Aug. 11 that the firm’s gas storage levels stood above 85%.
Muller said the Essen-headquartered company, one of Germany’s largest energy providers, was “well on track” to reach the government’s target by November.
Analysts told CNBC that Germany has been able to rapidly fill its gas stocks in recent…
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