October 27, 2023 [Lexology]- Looking at the current status of energy supply (as of 24 October 2023), Germany’s natural gas storage facilities have reached 98.8% filled.
This means that Germany has met, and even surpassed, the target set by the Ministerial Ordinance on the Adjustment of Filling Requirements for Natural Gas Storage Facilities (Ministerverordnung zur Anpassung der Füllstandsvorgaben für Gasspeicheranlagen), i.e., that the storage facilities should be 95% full by 1 November 2023.
Even though gas prices are now much lower than they were in the winter of 2022, energy costs are still significantly higher than before the outbreak of the war in Ukraine, and households are being forced to save money. This also is reflected in the latest figures. A recent comparison (as of 15 October 2023) shows that by week 41 of 2023, total household and commercial gas consumption had fallen by 52% compared to the 2018-2021 average. Industry has also consumed less gas than in previous years.
Germany has historically received most of its gas supplies from Russia. However, with the outbreak of the war in Ukraine, Germany was finally faced with the need to replace Russian gas with supplies from other countries. In order to make Germany independent of Russian gas imports as quickly as possible, the German government passed the LNG Acceleration Act (LNG-Beschleunigungsgesetz, the “Act”) in June 2022, which was amended in July 2023 to ensure the timely injection of liquefied natural gas on the German coast.
The original goal of the Act, which came into force on 1 June 2022, was to quickly replace natural gas from Russia through the construction of LNG terminals and associated pipelines.
The Act, which expedites permitting, procurement and review processes, allows for exemptions from environmental impact assessments and shortens public participation. Construction of pipelines and infrastructure began immediately after the Act came into force in the summer of 2022.
The aim of the new amendments to the Act, parts of which came into force on 15 July 2023, is to secure the supply of liquefied natural gas to German coastal locations.
Germany is not the only country that will be relying on LNG in the future: this trend can also be observed worldwide. The global LNG trade, for example, had already reached a total of 397 million tonnes by 2022. Industry forecasts predict that LNG demand will reach between 650 to 700 million tonnes per year by 2040. More investment in liquefaction projects will therefore be needed to bridge the gap between supply and demand that is expected to emerge by the end of the 2020s.
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