Germany's $15.64B credit line for gas may fall short, regulator warns
Pipe systems and shut-off devices at the gas receiving station of the Nord Stream 1 Baltic Sea pipeline and the transfer station of the OPAL long-distance gas pipeline in Lubmin, Germany, June 21, 2022. (AP Photo)


The head of Germany's energy regulator warned that the 15 billion euros ($15.64 billion) worth of credit lines provided by the government to buy gas for storage facilities may not be enough, according to an interview in the WirtschaftsWoche magazine on Monday.

Germany has sounded the alarm over gas shortages in response to dwindling supplies from Russia, in an escalating energy standoff between the West and Moscow after the invasion of Ukraine in February.

Bundesnetzagentur head Klaus Mueller said that the 15 billion euros might not be enough for Germany to fill up its gas storages by the winter because the supply squeeze may push up prices even higher in the meantime.

Germany has federally mandated targets to fill up its gas storages to 80% and 90% by October and November, respectively. Current storage levels are at about 61%.

"The more the gas price rises, the more expensive it becomes to reach the statutory storage targets for October and November," Mueller was quoted as saying.

Europe's largest economy could also face gas shortages in the coming months if Russian gas flows through the Nord Stream 1 pipeline, set to be temporarily stopped for maintenance in July, do not resume, Mueller warned.

"Based on our recent experience dealing with Russia, it would be irresponsible to assume that everything will be fine on its own."

Germany moved to stage two of a three-tier emergency gas plan last month after Russia reduced deliveries via the Nord Stream 1 pipeline. It is one step before the government rations fuel consumption.

Russia might continue to suspend gas flows through the pipeline beyond a planned maintenance shutdown this month, Economy Minister Robert Habeck said on Saturday.

The German government wants to enshrine possible rescue measures for energy companies such as Uniper in its energy security law and may end up acquiring a stake in the company as a last resort, sources also told Reuters on Monday.

Uniper declined immediate comment, adding it was receiving around 40% of the normal amount of gas from Russia at the moment.

Amendments to the energy security law are currently being discussed among government ministries, the economy ministry said.

Those could also allow the government to quickly impose a special levy as a means of passing on soaring energy costs equitably, the sources said.

A possible bailout for Uniper could be modeled after pandemic relief for Lufthansa, which was saved from bankruptcy during the coronavirus pandemic with a 9 billion euro aid package, a source said.

"The federal government should be given options along the lines of the Lufthansa aid," the source said.

Asked whether this could include taking a stake in Uniper, the sources said yes, but that would be a last resort.

Uniper is one of Russian Gazprom's biggest European customers and is suffering from dwindling supplies.

Meanwhile, flows of Russian gas to Europe via the Nord Stream 1 pipeline and through Ukraine were steady on Monday, as were reverse flows on the Yamal-Europe pipeline, operator data showed.

Physical flows to Germany through the Nord Stream 1 pipeline across the Baltic Sea stood at 29,230,775 kilowatt-hours per hour (kWh/h), in line with levels above 29,000,000 kWh/h over the weekend, operator company information showed.

Russian gas producer Gazprom this month said that capacity through the pipeline would be cut to only 40% owing to the delayed return of equipment being serviced by Germany's Siemens Energy in Canada.

Nord Stream will undergo regular annual maintenance from July 11 to July 21, taking flows down to zero and sparking concern over how promptly they will resume afterward.

Nominations for gas flows into Slovakia from Ukraine via the Velke Kapusany border point stood at 37.1 million cubic meters (mcm) per day on Monday, unchanged from the previous day, data from the Ukrainian transmission system operator showed.

Gazprom said its supply of gas to Europe through Ukraine via the Sudzha entry point was seen at 42.1 mcm on Monday, unchanged from Sunday.

Eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany were largely unchanged, data from pipeline operator Gascade showed.

Exit flows at the Mallnow metering point on the German border stood at 2,187,092 kWh/h early Monday, compared with about 2,130,000 kWh/h over the weekend.