SEFE must store 8 TWh of gas: Germany's winter gap
Berlin orders SEFE to store 8 TWh of gas by Dec 15. German storage is only 57% full – what it means for European gas prices.
Key Takeaways
- Germany has ordered state-owned SEFE to procure 8 terawatt-hours of gas for the winter, due by December 15.
- German storage sits at about 57 percent, far emptier than a year ago; the EU-wide level is 71 percent.
- European gas for November delivery trades above 70 euros per megawatt-hour again after the decision.
Winter is coming and the tanks are half empty. That is why the German government is stepping in after months of leaving the job to the market. The order to SEFE is small, but it marks a shift in German energy policy.
Hormuz chokes LNG flows, and Europe pays the price
The starting point is the situation in the Gulf. Hardly any liquefied natural gas has moved through the Strait of Hormuz for about seven months, according to OilPrice.com. Finanzmarktwelt puts the loss at roughly one fifth of global LNG trade. Europe has to compete with other buyers for cargoes, and it shows: according to OilPrice.com, gas prices are at their highest since January 2023 and more than double the level of a year ago.
That created a dilemma for storage operators over the summer. Anyone buying at these prices risks being unable to resell the gas profitably in winter. Many held back, and fill levels stayed low.
How big the gap really is
The numbers are clear. Germany's storage, the world's fourth largest according to OilPrice.com, is 57.74 percent full, Finanzmarktwelt reports. A year ago the same figure was 19 percentage points higher. For the EU as a whole, Gas Infrastructure Europe reports 71 percent for September 29. At the same point last year and in the five-year average, the figure was above 80 percent.
Against that shortfall, the order looks modest. Eight terawatt-hours fill about 3 percent of German storage capacity. By comparison, the state intervened far more forcefully in the 2022 crisis. The effect is therefore more symbolic. Berlin is acknowledging that supply could get tight without state help.
Berlin drops its old line
Until recently, the official position was that supply was not at risk and calls for intervention were misplaced. Handelsblatt was the first to report the order; according to Bloomberg, SEFE confirmed it itself on September 30. Economy Minister Katherina Reiche says the instruments prepared in advance have now become necessary, with Chancellor Friedrich Merz backing the step.
At the same time, the government is weighing an expansion of an existing market incentive to get traders storing more gas again, according to a Reuters source. EU Energy Commissioner Dan Jørgensen had already urged caution, citing growing risks to supply and prices. There is no de-escalation in sight in the Middle East.
What momentum says
Our snapshot shows the US natural gas contract, which most recently traded around 2.96 US dollars, not the European price. Momentum signals a bearish picture on the 1h and 4h, bullish on the 1D and neutral on the 1W. In the short term selling pressure dominates, while the daily picture keeps its upward direction. European scarcity apparently barely registers in the US price.
Scenarios
If Hormuz stays closed and storage fills only slowly, the European November contract is more likely to defend the 70 euros per megawatt-hour mark than give it up in the coming weeks.
If LNG flows recover faster than expected, the risk premium shrinks and the SEFE order would turn out to have been pure caution. The sources show no signs of that so far.
If other countries follow Germany's lead and buy at the state level, the fight over the same cargoes intensifies. No announcements to that effect have been made so far.