After the start of the Russian invasion of Ukraine, Berlin tries to quickly fill up the domestic gas storage facilities. But the state purchasing policy could now lead to billions in losses. Industry experts sharply criticize the responsible company's approach.
According to a media report, the risky gas purchases on behalf of the federal government to fill the storage facilities have led to losses in the billions. Accordingly, these losses will most likely be frozen when they are withdrawn this winter. The German gas customers will most likely have to pay for the impending minus.
According to information from the specialist service "Tagesspiegel Background" from parliamentary circles, the Trading Hub Europe (THE) commissioned by the government bought almost 50 terawatt hours of natural gas by the beginning of November this year. They were stored in German gas storage facilities. The volume procured corresponds to around one fifth of the total storage capacity in Germany. According to the informants, who refer to government documents, the average purchase price of around 175 euros per megawatt hour is significantly higher than the current market price for gas. A total of almost 8.7 billion euros was spent.
This trading position is now significantly in the red as wholesale natural gas prices have fallen. Gas for delivery in the coming months is being traded almost universally for around 145 euros in the Central European market. At present, a loss of around 1.5 billion euros would be expected in the event of a sale, even if the amount cannot be precisely quantified without looking at the trading books. If the recently increased gas price falls again, the losses could increase sharply.
The federal government is silent on the details of the business. The Ministry of Economics keeps the relevant information under lock and key, it is classified as secret. The BMWK "cannot make the information you have requested about the purchase prices of Trading Hub Europe GmbH publicly available," it said officially at the request of Tagesspiegel Background.
It is "not necessarily assumed that there must be economic losses at all," said a spokesman. "At the time when the implementation of the activity according to the gas storage regulations of the Energy Industry Act began, it was primarily a matter of filling the storage immediately and quickly." This was "successful". Since the beginning of October - at that time the storage facilities were almost full - THE has also entered the futures market.
Federal Network Agency President Klaus Müller said in the Tagesspiegel background interview that the matter is now "in view". Apart from THE, there was "no other player who could have done that" and there was little experience with purchasing large quantities of gas. "But we made adjustments as quickly as possible," he emphasized.
Industry experts have sharply criticized the approach. THE acted "months after the start of gas procurement exclusively on the spot market and still did not hedge the positions," said Hanns Koenig from the analysis company Aurora Energy Research. "This can only be explained by a lack of technical and economic skills and it should have taken such a long time to fix it."
Lion Hirth, professor of energy policy at the Hertie School, said: "THE acted like an energy market novice who doesn't know anything about risk management." As a result, the German state "de facto acted as a speculator". The word in the industry is also that THE procured gas for a very predictable time and at any price - other traders would have quickly optimized themselves against this rigid purchasing strategy, i.e. they would have derived more profitable trading strategies from it.
