Source: Germany to set aside up to EUR1.5bn for emergency gas reserves

A person with knowledge of the matter said that Germany's Economy Ministry was preparing?plans to establish a state-owned strategic gas reserve. This would be used for?emergencies, and could cost up to EUR1.5 billion ($1.72billion)?.

According to the person, this reserve is intended to protect against extreme situations such as sabotage or global gas shortages.

Germany has sought to improve energy security after the Russian invasion of Ukraine triggered a rush to replace Russian gas and revealed Europe's vulnerability to energy supply.

As part of the transition from fossil fuels, Germany's government agreed in 2020 to shut down coal-fired plants by 2038.

The plans are expected to be approved in mid-August by the cabinet. This would mean that the reserve would hold around 24 Terawatt-hours of gas. That's just over 10% of Germany's total storage capacity.

Costs of building the reserve, buying gas, and injecting into storage are estimated at between EUR1.2 billion to EUR1.5 billion. This cost is spread out over 2027 and 2028. The annual operating costs are also estimated between EUR150 million to EUR180?million.

The reserve would be financed by a tax on gas users.

(source: Reuters)