Germany orders state gas firm to boost winter reserves

The German government has instructed a state-owned energy company to expand its natural gas reserves, citing rising concerns over storage capacity as winter approaches. The decision, announced on Wednesday, highlights ongoing "geopolitical risks" stemming from the war in the Middle East.

Storage levels lag behind EU average

Current fill rates for Germany’s gas storage facilities stand at 58 percent. This figure is significantly lower than the European Union average of approximately 70 percent and falls well below the statutory thresholds required for Europe’s largest economy to prepare for the cold season.

A spokesperson for the Ministry of Economy confirmed to AFP that Economics Minister Katharina Reichel directed SEFE, which is owned by the federal government, to increase its natural gas stockpiles. The official stated that persistent geopolitical dangers were the primary driver behind this measure.

Market volatility and supply diversification

Earlier this month, European gas prices surged to their highest point in three years. This spike was triggered by the conflict in the Middle East and fears regarding a potential near-total closure of the Strait of Hormuz, which disrupted global energy markets.

Since Russian gas flows ceased following Moscow’s full-scale invasion of Ukraine in 2022, Europe has aggressively diversified its supply sources. However, instability in the Gulf region and the resulting rise in global prices present new challenges for European governments and businesses.

SEFE’s role and strategic objectives

SEFE, an acronym for Securing Energy For Europe, previously operated as the German subsidiary of Russian energy giant Gazprom. Berlin acquired the entity and placed it under state ownership after the outbreak of the war in Ukraine. The company currently manages roughly one-quarter of Germany’s total gas storage capacity.

The Ministry of Economy explained that SEFE will determine both the volume and timing of the additional storage. Authorities expect other companies to also raise their reserves. The spokesperson noted that SEFE’s actions aim to send a clear signal to the broader market.

Winter targets and future safeguards

Germany has set a target of reaching 80 percent fill levels in its main storage facilities before winter begins. Several factors have contributed to this year’s lower-than-usual inventory status. Europe emerged from the previous winter with severely depleted stocks, while the sharp increase in gas prices driven by the Middle East conflict raised the cost of refilling storage sites.

To mitigate risks from future energy shocks, Berlin plans to establish a strategic gas reserve starting in 2027.