First, as always, a word about temperature trends.
The global temperature is now 0.46 degrees Celsius higher than the long-term average. The US National Oceanic and Atmospheric Administration (NOAA) has already detected El Niño conditions in the Pacific Ocean, which will last until spring of next year. El Niño periods are typically associated with a global temperature spike of 0.2 degrees Celsius. The average temperature increase since 1979 has been 0.16 degrees Celsius per decade.

Source: drroyspencer.com/latest-global-temperatures/

Today, we will be discussing the increasingly difficult gas supply situation in Germany.

Filling German gas storage facilities before the heating season is going to be difficult

The fill level of German gas storage facilities is currently only at 44%. This is significantly below the long-term average, as fill levels used to be around 60% at this time. Refilling in 2026 started from a very low level of around 20%. Furthermore, gas storage operators are hesitant to purchase gas, since gas prices have been high since the Hormuz crisis. The operators’ business model was to buy inexpensive gas in the summer and sell it at a generally higher price in winter. Now, even the opposite is threatening to happen. Should the situation in the Persian Gulf ease, gas prices will be lower in winter than in summer, threatening losses for the operators. The International Energy Storage Association (INES) therefore announced in July that, technically, only a level of 76% can be achieved by the start of the heating season. The operators state: “Current price developments offer little incentive to store gas and thus jeopardize security of supply for the coming winter.”

In the event of a cold winter, the association is already predicting a gas shortage of up to 2 terawatt-hours per day in February/March 2027. This would mean a shortfall of up to 40% of the natural gas needed daily in Germany. In this case, the gas supply to industry, which consumes approximately 2 terawatt-hours of gas per day, is at risk of being cut off. INES Managing Director Heinermann sees the risks increasing considerably in the event of an exceptionally cold winter: “Therefore, the necessary conditions must be created now to fill storage facilities more effectively.”

The daily feed-in to the storage facilities currently amounts to 0.2%. At this rate, even less than 70% capacity would be reached by November 1st (120 days away).

The graphic from the Federal Network Agency shows how tense the situation is. However, the Federal Network Agency states that security of supply is guaranteed.

Germany still imports significant amounts of gas from Russia

Germany obtains only 10-13% of its natural gas via its much-lauded LNG terminals. However, approximately 40% of its natural gas comes from the Netherlands and Belgium, where it is landed as LNG and transported to Germany via pipelines. It is rarely discussed that Belgium obtains 40% of its LNG imports from Russia via Zeebrugge, as does the Netherlands with 13% of its imports. Therefore, we are still indirectly receiving significant quantities of Russian gas. France imports a third of its LNG from Russia (see the following graphic: Netherlands in yellow, Belgium in purple, France in blue, source: IEEAE LNG Tracker). According to EU plans, these imports are to be phased out beginning January 1, 2027. This will likely result in a trend towards higher prices.

Imports of Russian gas to the Netherlands (yellow), Belgium (purple), France (blue) in billion cubic meters per month

Minister Reiche is planning an emergency gas reserve from January 1, 2027 – but fracking remains prohibited

The German Federal Ministry for Economic Affairs and Energy is planning a strategic natural gas reserve to better prepare for gas supply crises. The reserve is to comprise 24 terawatt-hours, approximately 10% of Germany’s total gas storage capacity. The costs for purchasing and storing the gas are estimated at around €1.5 billion, which will be financed through a surcharge on gas prices for consumers. The corresponding legislation is scheduled to come into force on January 1, 2027.

This measure cannot be just dismissed. However, it must not be forgotten that the energy policies of the last four German federal governments have massively increased the vulnerability of the gas supply to crises. Due to the phase-out of nuclear power and the necessary backup for wind and solar energy, numerous gas-fired power plants will have to be built in the coming years. The Federal Network Agency has stated that security of supply in Germany can only be guaranteed “if additional dispatchable capacity of 22,400 MW to 35,500 MW is built by 2035.” 35,500 MW of gas-fired power plants will consume approximately 15 billion cubic meters of additional gas (Germany’s annual gas consumption in 2025: 85 billion cubic meters).

To make matters worse, the CDU, SPD, FDP and the Greens considered it appropriate to ban natural gas extraction through fracking in Germany.

Minister Reiche could envision a relaxation of the fracking ban. But the Chancellor is distancing himself. He doesn’t want to upset Finance Minister Klingbeil, who – like the SPD as a whole – has spoken out against fracking. Lars Klingbeil’s constituency (Heidekreis) lies in an area with promising shale gas deposits. Now the Minister is receiving strong support from an appraisal commissioned by the Friedrich Naumann Foundation from the former president of the Federal Institute for Geosciences and Natural Resources, Prof. Hans-Joachim Kümpel.  This report, which can be downloaded here, concludes that:

• The technology for extracting shale gas from depths of more than 1000 m excludes any risk to groundwater (down to a depth of 100 m).
• The earthquake risk during fracking is many times lower than during conventional natural gas extraction.
• Germany has a total recoverable volume of 1000 billion cubic meters, which corresponds to a production period of 50 years with an annual production volume of 20 billion cubic meters.
• It would be significantly cheaper than today’s world market prices.

This study is a must-read for anyone interested in energy policy.

Is a natural gas supply stoppage imminent due to the EU methane regulation?

The EU has issued a regulation stipulating that, from January 1, 2027, methane emissions from the extraction, processing, and transport of crude oil and natural gas must be reduced for climate protection reasons. This is intended to apply not only in Europe but also to non-European producing countries.

The strict rules apply to importers, who must prove that these new EU standards are met in the producing countries. While importers like SEFE, Uniper, and Shell warn that “a significant portion of the global gas supply will de facto be non-compliant” and that substantial supply shortages could occur, the EU intends to enforce its regulation with exorbitant fines of up to 20 percent of annual turnover.  On June 24, the US, Qatar, Nigeria, and Algeria, in a joint letter to the EU Commission, demanded changes to the import rules, otherwise Europe would face massive supply risks in the middle of January 2027. After all, 43% of natural gas consumption in Europe is affected. US Energy Secretary Chris Wright called the rules “crazy.” The US is prepared to supply Europe, but not under these conditions.

Minister Reiche rightly advocated for a suspension of the regulation at the EU level. Her SPD colleague, Environment Minister Schneider, spoke on behalf of the federal government in favor of maintaining the EU regulation and publicly criticized his ministerial colleague for her initiative.

If we experience supply problems in January 2027, we’ll know who to thank: a stubborn environment minister and a chancellor who lets the SPD’s escapades go unchecked.