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Saturday, June 15, 2024

German Energy Giant Warns Europe Remains Exposed To Natural Gas Supply Shocks

Authored by Tsvetana Paraskova via OilPrice.com,

Despite reducing significantly its dependence on Russian gas, Europe remains exposed to natural gas supply and price shocks as it lacks any buffers in the system, the CEO of Germany’s top utility, RWE, told the Financial Times.

“But we are not where we need to be because we shouldn’t have an energy supply system which is without any margin or buffer,” RWE’s chief executive Markus Krebber told FT.

The lack of buffers continues to expose Europe to shocks and price spikes even with natural gas storage filled up ahead of the winter heating season, the executive added.

Krebber said in October that natural gas supply disruptions continue to be a risk for Germany

“We don’t have any buffer in the gas system,” Krebber told German publication WirtschaftsWoche in early October, adding that Europe’s biggest economy must accelerate the construction of gas import infrastructure to avoid future shortages.  

“If there is very cold winter or supply disruptions it can lead to very critical situations – and as a result to shortages and significantly higher prices,” according to RWE’s top executive.

Last week, Michael Lewis, CEO of Germany’s energy giant Uniper, told Bloomberg Television that Europe needs additional volumes of LNG to ease the tight market and alleviate supply concerns.

The current relative calmness in the LNG market could turn into volatile turbulence again if fresh supply concerns emerge.

Germany expects natural gas prices to remain high until at least 2027, the government said in an August report on the measures to mitigate high energy costs for households.

A week earlier, INES, the group of German gas storage operators, said in its August gas update that Germany would continue to be at risk of natural gas shortages until the 2026/2027 winter season unless it takes measures to add LNG terminals, additional gas storage capacity, or pipelines.

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