German energy firm SEFE boosts gas storage in bid to secure winter reserves

By Christoph Steitz and Holger Hansen

FRANKFURT, Sept 16 (Reuters) - German state-owned energy firm SEFE said on Wednesday it had independently increased natural gas storage levels as Europe heads into winter with the lowest inventories in years.

Having weaned themselves off cheap and plentiful Russian gas after the 2022 invasion of Ukraine, Germany and other European nations are scrambling to rebuild depleted reserves ahead of the colder months as disruptions to Middle East supplies tighten the global market and push up costs for consumers and industry.

A government source told Reuters earlier on Wednesday that economy minister Katherina Reiche would use market incentives to shore up gas storage, while avoiding the direct state purchases that have stoked prices in the past.

The government has also agreed with state-owned energy companies Uniper and SEFE that they will make fuller use of their storage capabilities, the source added.

SEFE, a gas importer that also operates around a quarter of Germany's gas storage capacity, said it had "taken an independent commercial decision to fill the booked storage capacity".

Uniper said that while it was in regular discussions with market participants and authorities, the company alone would decide on how to use its storage assets, adding this would happen "solely on the basis of economic criteria".

GAS PRICES HIGHEST SINCE DECEMBER 2022

European gas prices reached their highest in almost four years this week on faltering diplomatic efforts to open the Strait of Hormuz, through which around a fifth of the world's oil and liquefied natural gas supply passed before the Iran war.

Germany's gas storage sites were around 53% full in early September, the lowest level for the time of year since records began 15 years ago, according to storage association INES, with the government maintaining that the filling of caverns should be taken care of by the market, not via political intervention.

Klaus Mueller, head of Germany's energy regulator, told broadcaster phoenix that it was unrealistic to hit an 80% storage target set for November 1, also pointing to liquefied natural gas terminals as a source of additional volumes.

The Economy Ministry said it is ready to take targeted measures for gas supply security if the situation deteriorates.

"As a matter of principle, winter preparedness is the responsibility of the market and energy utilities must fulfil their obligations," it said.

Uniper said its gas trading business had already stored more gas "than other market players", adding it would meet supply obligations even under challenging market conditions such as a particularly cold winter, and it was suitably prepared.

(Reporting by Christoph Steitz and Holger HansenWriting by Ludwig BurgerEditing by Linda Pasquini and Miranda Murray, Kirsten Donovan and Louise Heavens)