Gas demand drop hits German energy companies as storages full and prices low

The fall in natural gas demand due to the coronavirus crisis is not only impacting producing countries, but also German energy companies, because buffer stocks are almost full after a mild winter and prices are at a historic low, writes Angela Hennersdorf in WirtschaftsWoche. Even before the pandemic “gas prices were at such a low level that nobody earned money in the market,” said Hanns Koenig of energy think tank Aurora Energy Research. Jörn Higgen, market analyst at Uniper, said producers will have no choice but to pump less gas into the market by August at the latest, when storage capacities will be totally exhausted. “Gazprom from Russia or gas producers from Norway will have to cut back their production if the price continues to fall,” he told WirtschaftsWoche.

The importance of natural gas for Germany is set to grow further amid the country's energy transition, but it is unclear whether total demand will increase, for example because energy efficiency is projected to lower use in heating. As Europe’s domestic production decreases, the bloc has said it will import more liquefied natural gas (LNG) from countries such as the US – where the fracking boom has contributed to the global supply glut.