KEY POINTS
- Germany ordered state-owned SEFE to buy and store 8 terawatt-hours of natural gas by Dec. 15.
- German storage is only about 58% full, and Europe is heading into winter with its lowest inventories in years.
- The Economy Ministry expects other market players to meet their own storage obligations and wants the order to send them a signal.
Germany has ordered state-owned energy company SEFE to buy and store extra natural gas as the heating season begins. Reuters reported Wednesday that it’s a rare direct government move to build up the country’s gas reserves as geopolitical risks rise.
SEFE, short for Securing Energy for Europe, said the government told it to buy and store 8 terawatt-hours of gas by Dec. 15. The amount is small. In fact, it’s less than 1% of Germany’s annual gas use, which totaled 864 terawatt-hours last year, according to official data.
SEFE used to be Gazprom Germania, the German arm of Russia’s Gazprom. Germany took control of the business in 2022 and later nationalized it.
Even so, the order marks a shift in approach. Economy Minister Katherina Reiche ordered the purchases in coordination with Chancellor Friedrich Merz because of ongoing geopolitical risks, the ministry said Wednesday.
Why gas reserves are running low
Europe is heading into winter with its lowest inventories in years. Meanwhile, German storage sites are about 58% full, an unusually low level for this time of year.
The shortfall has deep roots. After Moscow launched its full-scale invasion of Ukraine in 2022, European countries cut their reliance on cheap Russian gas. Since then, they have struggled to rebuild their reserves, and disruptions to supplies from the Middle East have made that harder.
Prices show the strain. European gas prices have more than doubled this year after the Iran conflict disrupted a major liquefied natural gas route through the Strait of Hormuz.
A signal to the market
Until now, Reiche had relied on market incentives to fill storage. Reiche also avoided direct state purchases, which have pushed prices higher in the past.
However, the ministry doesn’t want SEFE to carry the load alone. In a statement, a ministry spokesperson said the government expects other market participants to meet their own obligations to store gas for the winter.
The spokesperson added that SEFE’s purchases are also intended “to send a clear signal to other companies.”
In other words, Berlin is pairing a small direct purchase with a push for the rest of the market to act. SEFE now has about 11 weeks to finish buying before the Dec. 15 deadline.
