Germany to build emergency gas reserves to boost energy security

The German Economy Ministry has confirmed an earlier report that it is preparing plans for a strategic gas reserve owned by the state to be used during emergencies.

The ministry stated that the reserve would contain around 24 terawatt hours (TWh), which is equivalent to just over 10% of Germany's gas storage capacity. It would be funded by a tax on gas consumers.

The reserve was created to provide protection?against extreme circumstances, such as the sabotage or severe global gas shortage.

Gas purchases will be spread out over two to three years, according to the ministry. This is to minimize any impact on prices. The first storage bookings will be made in winter 2026/27. Initial filling is scheduled to start in summer 2027.

Germany is working to improve energy security after the Russian invasion of Ukraine exposed weaknesses in Europe's energy grid.

According to a person who is familiar with the issue, the cost for building the reserve, buying the gas and injecting into storage will be between EUR1.2 billion (USD1.4 billion-$1.7 billion) spread over 2027 and 2028.

The source said that the annual operating costs are estimated between EUR150 and EUR180 millions, and that plans will be approved by the cabinet in mid-August.

(source: Reuters)